Gelonghui July 27?China Agricultural Ecology (08166.HK) announced that according to a letter dated July 12, 2023 from a stockbroker to Wide GracefulHoldings Limited (("Wide Graceful"), a wholly owned subsidiary of the company), the securities brokerage company will forcibly sell all securities collateral in the margin account unless Wide Graceful is able to settle outstanding margin loans in full with liquidated funds. As at 12 July 2023, the outstanding margin loans were about HK $5.01 million. During the period from 14 July 2023 to 26 July 2023, stockbrokers have forcibly sold 8.704 million shares (the "Chun Yi shares") held by Wide Graceful (a limited company incorporated in the Cayman Islands whose issued shares are listed on the Stock Exchange GEM (stock code: 8350)) for a total consideration of HK $1.6966 million (the "compulsory sale") before transaction costs. Upon completion of the compulsory sale, the outstanding balance due to the stockbroker will be about HK $3.32 million.
According to the margin client agreement entered into between Wide Graceful and the stockbroker on December 26, 2016, the compulsory sale is aimed at settling the outstanding balance owed by Wide Graceful to the stockbroker.
Under the margin agreement, in the event of a default, the securities brokerage company will have the right to dispose of any or all securities held on behalf of the client and use the proceeds and any cash deposits to settle all outstanding balances due to the securities brokerage firm.
The price of the compulsory sale is calculated on the basis of the current market price of the shares as quoted by the Stock Exchange at the relevant time. As the compulsory sale takes place in the open market, the identity of the trading counterparties to the compulsory sale or their respective major business activities cannot be ascertained and are not known to the Group.
Upon completion of the compulsory sale, Wide Graceful held 5.704 million Junyi shares in the brokerage firm. Stockbrokers may continue to force the sale of the remaining shares held by Wide Graceful.