Financial Network News On the evening of January 2, Gome Retail issued an announcement on the issuance of new shares under the general mandate for debt capitalization.
The announcement shows that on December 30, 2022, Gome Retail and Huanya International Capital Co., Ltd. (hereinafter referred to as the “creditor”) entered into an agreement. Accordingly, Gome Retail agreed to capitalize the debt owed by the group to creditors, and the creditors agreed to subscribe and the company agreed to issue a total of 406,285,600 new shares to the creditors at an issue price of HK$0.1023 per share. The Capitalized Shares represent approximately 11.37% of the existing issued share capital of Gome Retail and approximately 10.21% of the Company’s issued share capital enlarged by the issuance of the Capitalized Shares.
According to the announcement, the reason for the debt capitalization of Gome Retail is that the company owes the creditors unpaid advertising fees of approximately HK$415.63 million. As the group has liquidity problems, the company believes that debt capitalization will enable the group to settle outstanding debts owed to creditors and allow the group to conserve its cash resources for other uses.
According to the announcement, the issue price of Gome Retail is about 7% discount to the closing price of HK$0.11 per share on December 30, 2022; it is about 18.16% discount to the average closing price of HK$0.125 in the last five trading days before the last trading day. %.
Based on the closing price of HK$0.11 per share on December 30, 2022 (ie the date of the agreement), the face value of the capitalized shares is approximately HK$101,571,000 and the market value is approximately HK$446,914,000. After deducting the expenses related to debt capitalization, the net price per capitalized share is approximately HK$0.1023.
The announcement shows that after Gome Retail’s debt capitalization, the shareholding ratio of the controlling shareholder and parties acting in concert will drop from 21.53% to 19.33%.
(Source: Gome Retail Announcement)