According to a report from a financial news agency on December 24, Flower King Eco-Engineering Inc., ZhongTongGuoMai Communication, and Hanma Technology Group simultaneously issued announcements regarding the implementation of capital reserve fund to increase share capital this evening. This move has attracted wide attention in the capital markets and is different from the general practice of merely issuing additional stocks for dividends; the purpose of the increased shares this time is due to the need for bankruptcy restructuring.

Flower King Eco-Engineering Inc.: The capital reserve fund increase will be implemented at a ratio of 14.5 shares for every 10 shares, totaling an increase of 0.949 billion shares.

Flower King Eco-Engineering Inc. announced that due to the company's implementation of the reorganization plan and the capital reserve fund increase, the company's stocks will be suspended for one trading day on the date of stock equity registration for this capital reserve fund increase, which is December 25, 2024, and will resume trading on December 26, 2024. According to the restructuring plan, the company will carry out the capital reserve fund increase based on the existing total share capital of 0.654 billion shares at a ratio of 14.5 shares for every 10 shares, totaling an increase of 0.949 billion shares. After the increase is completed, the total share capital of the company will rise to 1.603 billion shares.

Flower King Eco-Engineering Inc. stated that this capital reserve fund increase in share capital is an important part of the restructuring plan of Hanma Technology Group and significantly differs from the typical capital reserve fund increases by listed companies.

According to the plan for this capital reserve fund increase, the increased stocks will not be distributed to the original investors, with 515,385,607 shares allocated to attract restructuring investors and 433,370,916 shares for repaying the company and five subsidiaries' general creditors.

The stocks from this increase will be directly registered to the special account opened by the company's administrator and some restructuring investors' securities accounts. The stocks registered in the special account will later be deducted to the relevant restructuring investors and creditors' securities accounts as per the regulations of the restructuring plan.

Given that the company's stocks will be suspended on the day of the capital reserve fund increase equity registration, the closing price of the stocks on the trading day before the equity registration day (December 24, 2024) was 6.14 yuan/share, higher than the average price of the capital increase of 5.51 yuan/share. The opening reference price for the stocks on the trading day following the equity registration day (December 26, 2024) will be adjusted to 5.77 yuan/share.

*ST Hanma mentioned in the risk warning that if the company or its subsidiaries do not implement or are unable to implement the restructuring plan, the company will be declared bankrupt, and the stocks may be Delisted. The company has been subjected to a Delisting risk warning due to the negative net assets attributable to the listed company's shareholders as of the end of the 2023 fiscal year. If the company falls under the conditions specified in Article 9.3.12 of the Shanghai Stock Exchange's Stock Listing Rules, the stocks may be Delisted.

*ST ZhongTongGuoMai: Implementing a capital reserve transfer of stocks at a ratio of 18 additional shares for every 10 shares, totaling an increase of 0.258 billion shares.

*ZhongTongGuoMai Communication announced that due to the company's capital reserve fund increasing Stocks, the company's Stocks will be suspended for one trading day on December 25, 2024, and will resume trading on December 26, 2024. According to the restructuring plan, the company will implement the capital reserve fund increase of Stocks based on the existing total share capital of 0.143 billion shares, at a ratio of 18 new shares for every 10 shares, totaling an increase of 0.258 billion Stocks.

*ST ZhongTongGuoMai indicated in the announcement that the additional stocks will not be distributed to the original shareholders and will be entirely used to attract restructuring investors and settle ZhongTongGuoMai's debts, with 212,613,398 shares being acquired by restructuring investors and their designated parties under the conditions specified in the restructuring plan. The funds paid by the restructuring investors for these stocks will be used to pay for bankruptcy costs and settle various debts; among them, 45,350,374 shares will be used entirely to settle ordinary debts, thereby mitigating ZhongTongGuoMai's debt risks. After the transfer is completed, the company's total share capital will increase to 0.401 billion shares.

The capital reserve transfer to increase the share capital is a significant component of ZhongTongGuoMai's restructuring plan and is different from the usual behavior of simply issuing additional stocks for dividends.

According to the restructuring plan, the average price for this capital reserve stock increase is 5.62 yuan/share. Since the company's stocks will be suspended from trading on the date of stock registration (December 25, 2024), the closing price on the stock registration date will be the price from the previous trading day (December 24, 2024), which is 10.83 yuan/share. This closing price is higher than the average price of 5.62 yuan/share for the stock increase. The opening reference price for the company's stocks on the trading day following the stock registration date (December 26, 2024) should be adjusted downward based on the adjusted ex-rights reference price calculation formula. According to this formula, the adjusted ex-rights (interest) reference price is calculated to be 7.48 yuan/share.

*ST ZhongTongGuoMai warned about risks stating that there is a significant risk of the stock price undergoing a substantial downward rights adjustment; there is a risk that the company's stocks may be Delisted; there is a risk of being unable to pay dividends for a long time; the company's stocks have been subjected to additional Delisting risk warnings, as well as additional risk warnings.

*ST Flower King Eco-Engineering Inc.: Implementing a capital reserve transfer of approximately 11.5 additional shares for every 10 shares, totaling an increase of 0.47 billion shares.

*Flower King Eco-Engineering Inc. announced that due to the implementation of the capital reserve fund being converted into additional share capital, the company’s stocks will be suspended for one trading day on December 25 and will resume trading on December 26.

According to the announcement, the company will execute a reorganization plan to convert the capital reserve fund into additional share capital, with a total share capital base of 0.407 billion shares, implementing the conversion at a ratio of approximately 11.55346 shares for every 10 shares, totaling an increase of 0.47 billion shares. After the increase, the total share capital will rise to 0.877 billion shares. Among them, 377,065,323 shares will be acquired in cash from the restructuring investors, with a cash consideration of 507,715,039 yuan; 43,201,997 shares will be distributed to other shareholders excluding the controlling shareholder, Flower King Group, with each shareholder receiving additional shares at a ratio of approximately 1.55346 shares for every 10 shares based on the number of shares they hold at that time (rounded to five decimal places); the remaining 49,781,729 shares will be used to repay company debts.

The announcement warns that this capital reserve fund conversion into additional share capital is an important part of Flower King shares' restructuring plan, which is significantly different from the capital reserve fund conversion for listed companies in general situations.

In light of the closing price on the last trading day before the equity registration date being 15.39 yuan/share, higher than the average price of the additional share capital of 2.12 yuan/share, the adjusted ex-rights (dividend) reference price calculated according to the restructuring plan will be 8.28 yuan/share.

According to the implementation measures for the additional share capital, the additional shares will be directly registered in a special account opened by the company's administrator, and subsequently, the administrator will apply to the court for separate deductions to the restructuring investors and related creditor accounts in accordance with the provisions of the 'Reorganization Plan.'

*Flower King Eco-Engineering Inc. warns of risks, stating that the company is entering the execution phase of the reorganization plan, and if it does not implement or cannot implement the reorganization plan, the company will be declared bankrupt, and the stocks face the risk of termination of listing; the company's stocks have been under other risk warnings since May 6, 2021, will be added with other risk warnings starting April 30, 2024, and face delisting risk warnings starting September 9, 2024.