Gleneagles Group (00638.HK) issued an announcement on March 27, 2024. On March 27, 2024, the offender (i.e. Resplendent Global Limited, a limited company incorporated in the British Virgin Islands) requested the board of directors to submit the proposal to the plan shareholders (registered holders of the planned shares on the record date) (the offeror's proposal to privatize the company through the plan and share option offer in accordance with the terms and conditions contained in the plan documents) to privatize the company by means of an agreement arrangement in accordance with section 99 of the Company Law. The plan provides for cancellation of the plan shares (issued shares other than those held by the offender, Chairman of the Company and CEO Cheng Yuyun and his spouse, Zeng Yuyun) in exchange for the payment of HK$0.72 (i.e. cancellation price) in cash to the plan shareholders for each planned share, a premium of about 33.3% over the closing price of HK$0.54 per share reported on the Stock Exchange on the last trading day.

As of the date of this joint announcement, the 700,000 share options granted under the share option scheme have not been exercised, with an exercise price of HK$2.262 or HK$2.470. Since the exercise price of unexercised share options under the share option scheme is higher than the cancellation price, the “see-through price” is negative and a cash offer with a face value of HK$0.01 for each unexercised share option will be made. A share option offer can only be effected after the plan comes into effect. As of the date of this joint announcement, all outstanding share options with an exercise price of HK$2.262 or HK$2.470 have been vested.

According to the benchmark described in this joint announcement, the maximum amount of cash expenses payable under the proposal is approximately HK$112.6 million. The offeror intends to provide financing to the offeror through its Hong Kong branch to disburse the cash required for the proposal. As co-financial advisers to the Offeror and SPDB International, the Offeror has sufficient financial resources to meet the maximum amount of cash costs required to implement the proposal. After the plan comes into effect, all plan shares will be cancelled (at the same time, the offeror will be issued the same number of new paid up shares), and the shares of the plan shares will no longer be valid as documents or evidence of ownership. The company will apply to the Stock Exchange to withdraw the listing status of its shares on the Stock Exchange in accordance with section 6.15 of the listing rules, and the withdrawal will take effect immediately after the effective date. The company has applied to the Stock Exchange to resume trading of shares on the Stock Exchange from 9:00 a.m. on April 18, 2024.

The announcement said that overall, stock prices are sluggish and trading liquidity is low. The cancellation price represents a 55.9% premium over the 90-day average closing price of HK$0.46, providing plan shareholders with an attractive opportunity to withdraw and realise all of their investments in the company in a challenging market environment. Furthermore, due to continued significant discounts in net asset value per share compared to market price, the company was unable to raise any meaningful equity capital without diluting its net asset value per share. From the company's perspective, if the proposal is successfully implemented, the company can increase flexibility in formulating long-term strategies and saving public listed company expenses.