[Caihua Social News] New Urban Construction and Development (00456-HK) announced that after the trading session on April 15, 2020, the company entered into a subscription agreement with the subscriber Zhang Xiaomu, under which the company offered 712328767 new shares to Zhang Xiaomu at HK $0.073 per share for a total consideration of HK $52 million and had to be paid in cash upon completion.

The new shares account for approximately 19.71% of the existing issued share capital and approximately 16.46% of the issued share capital of the company after the allotment and issue of subscription shares are subscribed on the grounds that the directors believe that the issue of subscription shares provides an opportunity for the company to expand its capital base, it will also strengthen the financial position of the Company, thereby providing working capital for the Group to develop its current and future business. This rights issue raised 51.75 million yuan. The company intends to use the net proceeds as general working capital and to finance potential acquisition and investment opportunities of the company.

In addition, after the trading session on April 14, 2020, the company entered into a subscription agreement with the subscriber Zhang Xiaomu, under which the company placed HK $52 million of convertible notes to Zhang Xiaomu. Convertible notes can be converted into 712328767 convertible shares (subject to adjustment) of HK $0.073 per share.

Assuming that the conversion shares are exercised in full at the exchange price, there will be a maximum of 712328767 conversion shares, accounting for approximately 19.71 per cent of the issued share capital of the company and 16.46 per cent of the total issued share capital expanded. The share price is about 17.98 per cent off yesterday's closing price of HK $0.089. The estimated net proceeds from the issue of convertible notes (after deducting the estimated expenses payable on the issue of convertible notes) will be about HK $51.75 million. The company intends to use the net proceeds as general working capital and to finance potential acquisition and investment opportunities of the company. However, the subsequent agreement to issue a total principal convertible note of $52 million to Zhang Xiaomu has been terminated.