Gelonghui November 17丨Huabang Technology (03638.HK) announced that the company proposed to raise no more than HK$56.825 million from shareholders through stock offerings. There is no underwriting of the stock offering, involving the issuance of up to 316 million offering shares at the subscription price of HK$0.18 per offering share. The benchmark is that for every 2 existing issued shares held on the record date, 1 offering share will be issued.
Assuming that all shares are subscribed to, the company intends to use the net proceeds from the stock offering for the following purposes: (i) approximately 35-40% of the net proceeds will be used to expand the Group's food trading business and financial services business or make investments related to related businesses in the following manner and amount; (ii) up to about 30-35% of the net proceeds will be used for strategic opportunities; and (iii) any balance of the net proceeds will be used for the Group's general working capital.
The Board of Directors has considered other methods of raising capital, including debt financing and equity placement. The board of directors has considered raising capital through debt financing, but this will place additional interest burdens on the Group and lead to an increase in the Group's balance to liability ratio, especially in the recent high global interest rate situation; at the same time, the Group must bear repayment responsibilities, which is not good for the Group. Due to this, the board of directors avoided raising capital through debt financing under these circumstances. Compared with stock offerings, the scale of equity capital raising, such as the placement of new shares, is relatively small, and may not be welcomed by the market after the company has recently completed the placement of shares.