According to Zhitong Finance App, Oriental Payment Group Holdings (08613) announced that on February 16, 2024, the company signed a subscription agreement with the subscriberer Blu Venture Partners, LLC. The company conditionally agreed to issue them to the subscriberer, and the subscriberer conditionally agreed to subscribe for convertible bonds. The principal amount was HK$4.388 million, and the exchange price was HK$0.145 per share.

Assuming that there is no change in the total issued share capital of the company, after all convertible bonds have been converted from the date of this announcement, the exchange shares account for about 1.57% of the total issued share capital of the company after being distributed and expanded by issuing exchange shares. The exchange price of HK$0.145 per share is equivalent to the closing price of the shares as reported by the Stock Exchange on February 16, 2024 (the date of the subscription agreement) of HK$0.145 per share.

According to the announcement, the company's outstanding debt of US$561,100 (equivalent to approximately HK$4.388 million) was due to service fees for the bCode project, such as business development expenses, technical management expenses and IT technical support. This amount has been continuously overdue for some time. The company and the subscribers have agreed to refinance the debt amount by issuing convertible bonds. The decision was made after considering two important factors: extending the maturity date of the debt amount allows the Group to defer significant cash flow, giving it a reasonable time to improve its financial performance and net current liabilities; and maintaining a positive relationship with subscribers will allow the Group to continue to receive relief for its bCode operations.

The company has explored different methods of raising capital to repay the amount of debt, such as debt financing, stock offering, public sale and share placement. However, due to the Group's recent loss situation, the company believes that obtaining additional debt financing from banks or financial institutions may result in unfavorable financing terms and lengthy negotiations. On the other hand, share offerings, public offerings and share placements will require finding and negotiating terms with an appropriate underwriter/placement agent. Preparation of compliance and legal documents along with other applications and administrative procedures is relatively time-consuming and less cost-effective. Furthermore, in the current volatile market conditions, it is challenging to estimate market demand and determine successful capital raising.

Furthermore, although allocating and issuing exchange shares will have a diluting effect on existing shareholders, the directors believe that the subscription will help the Group ease repayment pressure, strengthen its capital structure, and preserve cash flow for future business development. Therefore, the dilution effect is considered reasonable. After evaluating the advantages and disadvantages of various methods of fund-raising, the company has concluded that the subscription matters are a more efficient, cost-effective and appropriate method of raising capital for the Group.