Zhitong Finance App News, Hengyu Group (02448) issued an announcement. In order to adapt to the Group's future expansion and growth, the board of directors proposed increasing the company's current authorized share capital from HK$20 million, divided into 2 billion existing shares with a face value of HK$0.01 per share to HK$100 million, and divided into 10 billion existing shares with a face value of HK$0.01 per share (or 500 million consolidated shares after the share merger came into effect).

The board of directors proposed a share consolidation proposal to shareholders, which involved merging the issued and unissued existing shares with a face value of HK$0.01 per 20 shares into a consolidated share with a face value of HK$0.20 per share. The share consolidation is subject to approval by shareholders in the form of an ordinary resolution at the special shareholders' meeting before it can actually take place. Currently, shares are traded on the Stock Exchange with 2,500 shares per trading unit. After the share merger comes into effect, the trading unit for each lot traded in the consolidated shares will still be 2,500 consolidated shares. At the date of this announcement, the Company's authorized share capital was HK$20 million, divided into 2 billion existing shares with a face value of HK$0.01 per share. Of these, 1,161 billion existing shares have been issued and paid in full or recorded in the accounts. After the increase in the authorized share capital and the share merger comes into effect, assuming there is no change in the number of shares issued from the date of this announcement until the effective date of the share merger, the company's authorized share capital will be HK$100 million, divided into 500 million consolidated shares with a face value of HK$0.20 per share, of which 58.032 million consolidated shares (paid in full or recorded in the accounts) will be issued.

The company proposes to raise up to HK$158 million (before expenses) by issuing up to HK$232 million of consolidated shares in the form of shares to be offered at the subscription price of HK$0.034 per share (or HK$0.68 per consolidated share after the share merger takes effect) on the basis of issuing 4 shares offered for each consolidated share held on the record date (assuming that no further shares have been issued or repurchased on or before the record date). Once the share offering conditions are met, the share offering will be carried out on a non-underwriting basis, and will not be affected by the degree of acceptance of the provisional allotment of shares. The stock offering is for subscription by eligible shareholders only, and will not be presented to excluded shareholders. There are no overapplication arrangements relating to the share offering.

The estimated net proceeds from the share offering (after deducting estimated expenses relating to the share offering) are expected to be up to HK$155 million.

The directors believe that the proposed share merger would increase the company's share price to over HK$0.1 and increase the unit value per lot of existing shares to over HK$2,000, causing the expected value of each trading unit to increase accordingly. Therefore, the proposed share merger would allow the company to comply with trading requirements under the listing rules. Furthermore, share mergers will reduce the overall transaction and processing costs of the company's shares as a percentage of the market value of each trading unit, as most banks/securities banks will charge a minimum transaction fee for each securities transaction. The company believes that the adjusted share price resulting from the share merger will keep the trading volume of each trading unit at a reasonable level and will enhance the company's corporate image to make investing in shares more attractive to a wide range of institutions and professional investors, thus helping to further expand the company's shareholder base. The directors also believe that the share merger will provide greater opportunities and flexibility for the company to raise share capital in the future.

As of the date of this announcement, the company has no intention of carrying out other corporate actions in the next 12 months that may weaken or adversely affect the proposed purpose of the share consolidation, and the company has no specific plans to carry out any fund-raising activities in the next 12 months other than the share offering as set out in the announcement. However, the Board of Directors cannot rule out the possibility that the company will raise bonds and/or equity when suitable fund-raising opportunities arise to support the Group's future development. The company will issue further announcements in due course in accordance with the listing rules.