Xingli (Hong Kong) Holdings (00396) has announced that after trading hours on June 13, 2024, the seller Great Ample Holdings Limited (a wholly-owned subsidiary of the company) has entered into a sale and purchase agreement with the buyer (three founders of Sanwei Group) subject to certain conditions. The seller has agreed to sell (and the buyer has agreed to purchase) the sale shares representing all issued share capital of the target company Success Profit International Limited for HKD 62 million, subject to the terms and conditions of the agreement. The net proceeds of HKD 60.7 million will be distributed to shareholders as a special dividend of HKD 0.0751 per share.

The board of directors intends to seek approval from shareholders at a special meeting to cancel the entire premium account balance of the cancelled shares, and transfer the balance to the paid-in surplus account after offsetting all accumulated losses, and authorize the board of directors to apply the balance in accordance with the applicable laws and regulations of Bermuda.

According to the announcement, prior to the end of the year 2019, the target property used to be one of the production bases for wooden furniture of the group and a showroom for group furniture products. However, due to the outbreak of the COVID-19 pandemic, some orders and projects were forced to be cancelled, resulting in a decline in capacity utilization rate. As most customers have switched to online platforms, such as using virtual image display monitors for video conferencing and selecting furniture, the use of the showroom has significantly decreased. In view of the change in the operating environment and in order to reduce the operating and maintenance costs of the target property, the group has suspended its production activities at the target property and outsourced wooden furniture production to an independent furniture manufacturer in China.

Considering that most of its production has been outsourced to independent furniture manufacturers, the group does not need the target property for its production activities. This event caused certain areas of the target property to be restricted. After completion, the group will no longer have any bank loans or borrowings, and the remaining capital and debt levels of the group are expected to be greatly improved. The Southeast Asian furniture business of the China company will be fully taken over by other subsidiaries of the group, and the group's furniture business will not be affected after completion. The board of directors believes that the sale is fair and reasonable, and is in the overall interests of the company and its shareholders. The sale and purchase agreement was entered into by the company and the buyer on normal commercial terms after fair negotiations.