REDCO HEALTHY (02370) has issued an announcement regarding the appointment of receivers over 75% of the company's issued shares. On December 31, 2025, the company received a letter from Mr. Li Yinglin, the receiver appointed over 150 million pledged shares, representing 75% of the company's total issued share capital. These shares were pledged as security for debts owed by the company's controlling shareholder, REDCO Properties Group Limited (REDCO Properties).
On May 23, 2026, the company was informed by REDCO Properties that it had received a letter from the receiver. The letter stated that due to the ongoing default under the financing arrangement, despite the receiver's continuous marketing efforts, no viable commercial offers had been received for the pledged shares. The letter specified that C Wan International Limited, as the sole registered lender under the financing, had proposed to acquire 48 million ordinary shares of the company (the Target Shares) from the pledged shares, equivalent to 24% of the company's issued share capital, for a consideration of HK$45.12 million.
The consideration is to be settled in a non-cash manner, through partial offset against the outstanding amount of the financing owed by REDCO Properties. The price was calculated with reference to the closing price of HK$0.94 per share on the Hong Kong Stock Exchange on May 15, 2025.
Considering factors including the continuing default by REDCO Properties under the financing, the absence of any viable commercial offers for the pledged shares despite ongoing marketing efforts since the receiver's appointment, and the terms of the proposed sale, the receiver has issued a formal notice to REDCO Properties. Unless, before the close of business on May 26, 2026, (i) REDCO Properties procures a buyer willing to acquire the Target Shares for not less than HK$45.12 million, (ii) fully repays the outstanding portion of the financing, or (iii) REDCO Properties raises a reasonably substantiated objection, the receiver will deem REDCO Properties to have no objection to the sale. The receiver will consider the sale fair and reasonable under these circumstances and will proceed to execute relevant transaction documents and implement the sale without further notice to REDCO Properties.
REDCO Properties stated that it has since been negotiating with the lender, requesting a suspension of strict enforcement while continuing friendly discussions to seek viable alternatives. However, on May 22, 2026, the lender indicated it would not grant any further repayment extensions to REDCO Properties unless repayment was made.
Given REDCO Properties' lack of financial resources to fully repay the aforementioned HK$45.12 million by May 26, 2026, it is expected that the receiver will dispose of the Target Shares to the lender by that date. Consequently, it is anticipated that by May 26, 2026, the Target Shares, representing 24% of the company's issued share capital, will be sold to the lender to partially offset the financing owed by REDCO Properties to the lender.
Should the aforementioned share sale occur, REDCO Properties' holding in the company would be reduced to a 51% interest in the issued shares (down from 75%), and the lender would become a major shareholder of the company.
According to an announcement issued by REDCO Properties on May 22, 2026, it stated it could not guarantee whether the receiver/lender would further dispose of the remaining pledged shares. If the receiver/lender seeks further disposal of the pledged shares, it could result in the company no longer being consolidated in the consolidated financial statements of REDCO Properties.
At this stage, the company cannot estimate the actual impact of the sale on its financial or business performance but does not expect it to cause any immediate material adverse effect. The board of directors will continue to monitor the situation and has requested REDCO Properties to provide further updates on any developments regarding the relevant matters.
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