Zhitong Financial APP, Green Energy Technology Group (00979) announced that on August 1st, 2023, the company entered into the agreement with its creditors (Mr. Yang Bin). Subject to its conditions, the company has agreed to allot and issue, and the creditors have agreed to subscribe for a total of 2.103 billion capitalized shares at the issue price of HK $0.01per capitalized share. The total issue price will be fully offset on a monetary basis against the loan owed by the company to creditors of about HK $21.03 million.
Assuming that there is no change in the issued share capital of the company from the date of the agreement to the delivery date, the capitalized shares are equivalent to approximately 19.61% of the issued share capital of the company on the date of this announcement; and the issued share capital of the company as enlarged by the allotment and issue of capitalized shares is approximately 16.40%.
Taking into account the liquidity and financial position of the Group, the Directors are of the view that debt capitalization will enable the Group to settle outstanding loans without using existing financial resources, thereby avoiding large cash outflows. The Directors are also of the view that while reducing the overall debt level of the Group, debt capitalization enables the Group to retain liquidity as far as possible, thereby strengthening the Group's financial position.
Although the allotment and issuance of capitalized shares will have a dilutive impact on existing shareholders, considering that debt capitalization will relieve the repayment and repayment pressure on the group due in a short period of time, the loan will be converted into equity in the company, thereby expanding the company's capital base. And the financial impact of debt capitalization will be to reduce the Group's asset-liability ratio and enhance its net asset position, the Directors are of the view that, on the whole, the dilution impact of the allotment and issue of capitalized shares is reasonable.