Hongguang Semiconductor (06908) intends to issue shares and convertible bonds for early redemption of acceptance notes to settle HK$41.417,600 debt without cash

According to the Zhitong Finance App, Hongguang Semiconductor (06908) announced that on February 10, 2026, the company issued HK$408.16 million notes to the holder Red Mont Global Limited in exchange for the acquisition of all shares in Red Mont HK Limited. The notes will expire in August 2027. On November 6, 2026 (after the transaction period), the company signed an early redemption agreement with the holder. The details relate to the company's early redemption of notes.

As far as the early redemption agreement is concerned, the company and the holder have agreed and confirmed that the total outstanding amount is approximately HK$41,417,600. On the premise that early redemption occurs, the notes will stop generating any interest after the date of the early redemption agreement. The parties have agreed to fully redeem the notes in advance, on the condition that the company (a) allocates and issues a total of approximately 1155 million compensation shares to the holders (or their nominees) at an issue price of HK$0.22 per share on the completion date to repay approximately HK$25.417,600 of the total outstanding amount; and (b) issue HK$0.26 per share to the holders (or their nominees) on the completion date based on the exchange price of HK$0.26 per share at the time of full conversion to the holders (or their nominees) The balance of the total outstanding amount was HK$16 million.

According to the announcement, early redemption provides a valuable opportunity for the Group to complete full settlement of the notes without using the company's existing financial resources. After completion, most of the total outstanding amount will be settled through the issuance and distribution of compensatory shares without any cash expenses, thus reserving funds for semiconductor research and development and equipment procurement. Cashless settlement through compensatory shares has not only strengthened the Group's capital base and improved its net asset position, but also drastically reduced debt, which will further increase the balance to liability ratio. Consideration shares account for approximately 9.86% of the total number of existing issued shares and about 8.97% of the total number of issued shares expanded through allotment and issuance of consideration shares. As a result, the improvement in the financial situation was achieved without a significant dilution of existing shareholders' equity. Furthermore, replacing the original notes with two-year bonds, extending the maturity date of the debt for more than one year, and reducing the interest rate from 2% to 1% per year, thus allowing the Group to have more buffer and time in managing the debt structure, while reducing the Group's ongoing financing costs.