Tian Lun Gas Holdings Limited has issued an extensive supplemental announcement detailing five cash-settled total return swap (TRS) arrangements used to hedge the cost of acquiring shares for its 2021 share award scheme (the “Scheme”). The disclosure follows earlier announcements between May 2022 and June 2026 and provides clarification on structure, economics, risk management and future commitments.
Transaction profile • Counterparty: Hantec Securities Company Limited, an SFC-licensed institution. • Four active TRSs reference 66.97 million Tian Lun Gas shares—equivalent to 6.9% of issued capital—at a blended initial price of HK$4.63 per share. • Aggregate equity notional amount (ENA): HK$309.99 million. • Collateral (Independent Amount, IA): HK$310.00 million, fully cash-funded by the company. • Scheduled terminations (after 2026 amendments): 2 October 2027 (First and Third TRS), 20 October 2027 (Second TRS), and 28 May 2027 for the Fourth TRS, which Tian Lun Gas has pledged to end early by 31 December 2026. The fifth TRS signed in 2024 remains inactive and will not be used.
Commercial rationale and pricing evolution The swaps lock in the economic cost of future share purchases by the Scheme’s trustee: • If the market price rises above the initial reference price, Tian Lun receives payments that offset higher acquisition costs. • If the price falls, Tian Lun compensates the counterparty, while the trustee buys shares more cheaply. Financing terms were reset twice as market conditions shifted: initial 6-month HIBOR-based funding (70% IA) moved to 1-month HIBOR (60% IA), and ultimately to fixed-rate charges capped at HK$32.60 million with IA increased to 100%, eliminating future margin calls.
Financial impact to 30 June 2026 • Financing costs: HK$64.50 million; transaction expenses: HK$1.45 million. • Dividend-equivalent income received: HK$33.97 million. • Net cash cost: HK$31.98 million, or roughly 3.0% per annum on notional exposure. • Mark-to-market loss: HK$124.64 million, driven by a fall in the share price to HK$2.77 from the blended reference price of HK$4.63. Approximately HK$40.80 million of this loss relates to exposure exceeding the Scheme’s remaining share requirement.
Exposure management and undertakings The company acknowledges that cumulative referenced shares outsize the Scheme’s residual need (3.2% of current share capital). To rectify this: 1. The Fourth TRS will be terminated no later than 31 December 2026. 2. Additional early reductions are targeted by 30 June 2027; collateral will be returned pro rata. 3. No further extensions or new share-linked TRS/derivatives will be entered without prior Stock Exchange consultation. 4. A new derivatives and treasury policy caps any future exposure to the Scheme’s outstanding requirement and imposes counterparty concentration limits.
Counterparty credit considerations Tian Lun currently has HK$310.00 million of IA with Hantec; after netting against the mark-to-market loss, net counterparty exposure stood at approximately HK$185.40 million as of 30 June 2026. The company reviews Hantec’s regulatory filings and financial health monthly, and is exploring escrow, security or guarantees for remaining IA balances.
Listing Rules classification On an aggregated basis the TRS Transactions represent a discloseable transaction under Hong Kong Listing Rule 14.06(2); they require announcement and reporting but not shareholder approval.
Board composition (as at 24 September 2026): Chairman & CEO Mr. Xian Zhenyuan, Executive Directors Ms. Li Tao, Mr. Xiao Hui, Ms. Zhang Baixuan; Non-executive Directors Ms. Chen Hong, Mr. Zhang Daoyuan; Independent Non-executive Directors Mr. Li Liuqing, Mr. Lei Chunyong, Ms. Zhou Lin, Ms. Tao Xiaohui.
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