[Caihua Social News] 01063-HK announced that 580 million new shares were allotted at 0.1 yuan per share through the indirect wholly-owned subsidiary, Xinque Securities, accounting for about 38.85% of the enlarged share capital, and the matching price was about 13% off last Friday's closing price of 0.115 yuan.
The company raised 58 million yuan through this rights issue, the net fund raised is about 56.2 million yuan, and 18 million yuan is to be used for the network application development of developing virtual assets trading platform; 11 million yuan for the purchase of equipment and related installation and technical support services; 8.1 million yuan for cloud infrastructure and professional network management services; 8.4 million yuan for staff costs and consultancy fees for operational and technical personnel and external consultants; 2.4 million yuan for digital and data securities service fees And 8.3 million yuan as working capital for the operation of the virtual asset trading platform.
In addition to the placing, the Board has also considered other financing alternatives, including debt financing; and other equity financing (such as rights issues and public offerings).
As far as debt financing is concerned, it requires the Group to retain part of the Group's cash balance as principal and interest repayment, which may limit the Group's flexibility and ability to use cash for future business development and to seize the business opportunities that arise from time to time. At the same time, the directors believe that debt financing will increase the group's continuing interest expenses, which may affect the company's profitability and will increase the group's asset-liability ratio.
On the other hand, the directors are of the view that it is difficult to obtain debt financing without any collateral. For rights issues and public offerings, the Group has approached three securities companies on the possibility and feasibility of acting as underwriters of rights issues or public offerings with a fund-raising scale of about $50 million to $60 million. All securities companies have indicated that in the current market atmosphere, they are not prepared to act as underwriters for rights issues or public offerings on the scale of capital raised by the Group. In addition, it may take longer and higher cost to complete the rights issue and public offering, therefore, the company considers that the placing item is more time-saving and cost-saving.
In view of the above, the Directors consider that the placing is the most feasible way for the company to raise sufficient funds at present.
The Group plans to apply for a Category 7 (provision of automated trading services) licence to conduct regulated digital asset brokerage and automated trading services business in Hong Kong. The company believes that as one of the pioneers in operating a trading platform for the trading of virtual assets approved by the SFC, the Group will be able to provide top-level and comprehensive financial services to its clients. In view of the current market atmosphere and the upcoming trend of digital asset investment, the company expects that the operation of the virtual asset trading platform will enable the Group to seize this huge business opportunity and enhance the revenue source of the Group's financial services business.