China's Changbaishan International (00989) and Guangze Group Hong Kong enter into a restructuring framework agreement triggering a full cash offer

According to Zhitong Finance App, China Changbaishan International (00989) and the offender Guangze Group (Hong Kong) Co., Ltd. jointly announced that on July 15, 2026, Guangze Group Hong Kong signed a restructuring framework agreement with the company. Based on this, the company will implement a proposed restructuring involving (i) subscription matters; and (ii) the plan. Subject to the terms and conditions of the subscription agreement, and subject to the withdrawal of the full amount of HK$39 million under the financing agreement, Guangze Group Hong Kong must subscribe for a total of 260 million subscribed shares at a total subscription price of HK$39 million, at a total subscription price of HK$0.15 per share. This amount must be paid in full through the use of Guangze Group Hong Kong's advance and advance payments under the financing agreement. The subscription price is fully allocated to the subscribed shares on an equal basis.

According to the books, records and information available to the company, and before the ruling and/or ruling on the approved plan claims was made, the total amount of claims owed by the company to Guangze Group in Hong Kong and translation was approximately HK$404 million.

According to the terms of the restructuring framework agreement, the company proposes the plan between the company and the plan's creditors. After the plan comes into effect, all plan creditors' plan claims will be fully dismissed and exempted. In return, plan creditors holding approved plan claims under the plan will be entitled to receive plan shares allotted by the company and issued to the planning company, and such shares are held by the planning company in trust for the benefit of plan creditors with approved plan claims, and will only be distributed to the relevant plan creditors after ruling and/or ruling on their approved plan claims and after the end of the offer.

According to the plan, the planning company will be allotted and issue approximately 4.742 billion plan shares. The plan company will hold plan shares in trust for the benefit of the plan creditors until its plan claims are decided and/or ruled upon and the offer ends under irrevocable undertakings. HK$0.15 per planned share, a discount of approximately 79.17% from the closing price of HK$0.72 per share as reported on the Stock Exchange on the last trading day.

Assuming that the total amount of HK$39 million under the financing agreement has been withdrawn, and there is no other change in the number of shares issued between the date of this joint announcement and the date of completion (other than the allocation and issuance of subscription shares and planned shares), the shareholding ratio of Guangze Group Hong Kong and Yayi will increase to approximately 2,223 million shares and 818 million shares respectively, accounting for approximately 41.46% and 15.26% of the expanded issued share capital, respectively. As a result, the total shareholding interests of the Actionists Group will increase from approximately 109 million shares, accounting for about 30.20% of the shares issued on the date of this joint announcement, to approximately 3.06 billion shares, accounting for approximately 57.07% of the expanded issued share capital. A mandatory comprehensive cash offer was triggered to acquire the remaining approximately 251 million public shares at HK$0.15 per share, involving HK$37.7 million.

Considering that the company faces severe liquidity shortages and severe financial pressure, its ability to repay all maturing debts has been seriously impaired, and the company does not have sufficient financial resources to cover all of its maturing liabilities. Given that Guangze Group Hong Kong is willing to provide capital for the Group to reduce corporate debt and support the Group's business operations, the directors believe that entering into a restructuring framework agreement and subscription agreement will facilitate the Group's debt restructuring and facilitate the Group's debt restructuring plan.

On the other hand, the company believes that the proposed restructuring is a strategic and practical solution to resolve its outstanding debts in an orderly manner, so that all debts and liabilities owed by the company to its creditors will be discharged and settled in accordance with the terms of the plan. Otherwise, the company will face an unsustainable financial situation and the risk of insolvency, and the expected returns for shareholders and plan creditors may be lower or insignificant.