SPACE GROUP (02448) has announced that on January 5, 2026, the company, its joint and several liquidators, and an investor entered into a restructuring agreement. Under this agreement, the company will implement a restructuring involving, among other things, (i) a capital reorganization; (ii) a subscription agreement; and (iii) a scheme of arrangement for creditors. Subject to, among other conditions, approval by independent shareholders, the company will proceed with the capital reorganization, which includes a share consolidation, a capital reduction, and a subsequent share subdivision. Pursuant to the restructuring agreement, the company has conditionally agreed to allot and issue, and the investor has conditionally agreed to subscribe for, a total of approximately 104 million subscription shares at a price of approximately HK$0.30634 per share. The investor will subscribe for shares worth approximately HK$32 million, with payment to be made by capitalizing the transaction loan into subscription shares. This involves applying the actual amount of the transaction loan (expected to be the full principal of HK$32 million) advanced by the investor under the loan financing agreement on a dollar-for-dollar basis to pay the total subscription price, which will be considered fully paid upon capitalization. The total number of subscription shares to be allotted and issued under the subscription represents approximately 90% of the company's enlarged issued share capital following adjustments for the effects of the capital reorganization and the subscription. As of the date of this joint announcement, the investor has already provided the company with a transaction loan totaling HK$6.278 million in principal. The full principal amount of HK$32 million is expected to be advanced before the completion date of the subscription, with the balance to be drawn down on or before that date. A scheme of arrangement for creditors will be implemented, under which scheme creditors with admitted claims will be entitled to receive, for their respective admitted claims, (a) a cash consideration on a pari passu and pro-rata basis; and (b) (if any) the net proceeds from the assigned claims or the net realization proceeds on a pari passu and pro-rata basis. Subject to the scheme of arrangement obtaining approval from creditors, independent shareholders, the Hong Kong court, and relevant regulatory bodies, and upon its completion, all claims held by scheme creditors against the company as of the winding-up order date (July 15, 2024) will be fully settled, discharged, and released. As of the date of this joint announcement, the existing shares are traded on the Stock Exchange in board lots of 2,500 existing shares each. It is proposed that, conditional upon the share consolidation taking effect, the board lot size for trading on the Stock Exchange will be changed from 2,500 existing shares to 2,000 consolidated shares. The change in board lot size will become effective on the same day the capital reorganization takes effect. On October 16, 2025, the company (as borrower), the joint and several liquidators, and the investor (as lender) entered into a loan financing agreement. Under this agreement, the investor will provide the company with a HK$32 million transaction loan to facilitate the implementation of the restructuring. The transaction loan is interest-free and repayable upon demand by the investor, with the repayment date being no earlier than January 31, 2026 (or such other date as the parties may agree). Upon the issuance of the winding-up order against the company on July 15, 2024, the powers of all directors were immediately terminated, and none of the current directors are involved in any matters pertaining to the company. Given the inability to form an independent board committee to provide recommendations to independent shareholders on voting in favor of the resolutions at the special general meeting to approve the restructuring agreement and the transactions contemplated thereunder (including the capital reorganization, subscription, grant of specific mandates, placement, creditors' scheme, whitewash waiver, and connected transaction), an independent financial advisor has been appointed in accordance with the Takeovers Code to advise the independent shareholders. Furthermore, trading in the company's shares was suspended on the Stock Exchange commencing at 11:17 a.m. on July 15, 2024, and will remain suspended until further notice.
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