Hong Kong Communications International Holdings (00248) proposes a “2 for 1” benchmark share offering to raise approximately HK$9.4 million

According to Zhitong Finance App News, Hong Kong Communications International Holdings (00248) issued an announcement. The board of directors proposed to supply shares on the basis that 1 share can be allocated for every 2 composite shares held on the record date, at the subscription price of HK$0.28 per share, and raise up to about HK$21.8 million (before expenses) by issuing up to 778.33,200 shares to eligible shareholders (assuming there is no other change in the total number of issued shares on or before the record date). The 778.33,200 shares to be issued under the terms of the share offering account for about 50.0% of the total number of consolidated shares issued after the share merger came into effect, and about 33.3% of the total number of consolidated shares already issued that were expanded through allotment and issuance of shares offered. The share offering is carried out on a non-underwriting basis. Participation is limited to eligible shareholders, and will not be extended to ineligible shareholders.

Assuming that there is no change in the number of issued shares on or before the record date, the 778.33,200 shares offered to be issued in accordance with the proposed share offering account for about 50.0% of the total number of consolidated shares issued after the share merger came into effect; and about 33.3% of the total number of issued consolidated shares expanded through allotment and issuance of shares offered after the share merger became effective.

The subscription price for each share offered is HK$0.28, which must be paid in full when the eligible shareholders accept the provisional quota for the relevant shares offered under the offer, after applying for additional shares, or when the transferee of the unpaid share offering accepts the provisional quota for the relevant share offering. The subscription price is discounted by approximately 25.5% from the adjusted closing price of HK$0.376 per consolidated share (based on the closing price of HK$0.047 per existing share as reported on the last trading day on the Stock Exchange and adjusted for the impact of the share consolidation).

The maximum amount of income expected to be raised from the stock offering is approximately HK$10.3 million (after the subscription amount due for shares temporarily allocated to Mr. Chan Chung-yi and the shareholder loan of approximately HK$11.5 million). After deducting related expenses, the maximum net income that can be raised from a stock offering is approximately HK$9.4 million.

The Company intends to use the net proceeds from the stock offering for the following purposes: approximately HK$8.5 million or 90% of the net maximum income will be used to repay the Group's bank loans; and the remaining balance of approximately HK$900,000 or 10% of the maximum net proceeds will be used to supplement the Group's general working capital to cover employee costs.

If the share offering is insufficient, the net proceeds will first be used to repay the Group's outstanding bank loans, and the balance (if any) will be used for general working capital purposes.

The Board of Directors proposed increasing the authorized share capital of the Company from HK$20 million (divided into 2 billion existing shares) to HK$40 million (divided into 4 billion existing shares) by adding 2 billion existing shares. After shareholders pass an ordinary resolution at the special shareholders' meeting to approve the increase in authorized share capital, the increase in authorized share capital will take effect on the day of the special shareholders' meeting.

The board of directors recommended a share consolidation, according to which each 8 shares of issued and unissued existing shares with a face value of HK$0.01 per share will be consolidated into 1 consolidated share with a face value of HK$0.08 per share. Stock mergers can only be implemented (including) after shareholders pass an ordinary resolution at the special shareholders' meeting to approve the share merger. The share merger will take effect on the second business day immediately following the Extraordinary General Meeting of Shareholders. The Company will apply to the Stock Exchange for approval of the listing and trading of the consolidated shares after the share merger comes into effect.

At the date of this announcement, the trading unit for each lot of existing shares on the Stock Exchange was 4,000 existing shares. The board of directors recommended that after the share merger comes into effect, the trading unit of each lot on the Stock Exchange will be changed from 4,000 existing shares to 10,000 consolidated shares.

Based on the closing price of existing shares at HK$0.047 per share (equivalent to the theoretical closing price of HK$0.376 per share for consolidated shares), the value of each existing lot of shares is HK$188; assuming the share merger takes effect, the value of each lot of 4,000 consolidated shares will be HK$1504; and assuming that the share consolidation and change in the trading unit of each lot take effect, the estimated value of 10,000 consolidated shares per lot will be HK$3,760.