HXTL (ASX: 01085) has announced that on June 18, 2026, its indirect wholly-owned subsidiary, Xinke, acting as guarantor, entered into a guarantee contract with a bank for the bank's benefit.
Xinke has agreed to guarantee the proper fulfillment of repayment obligations by the borrower, Tianjin Jizhixin Technology, to the bank under a loan agreement. Currently, Xinke and its wholly-owned subsidiary, Nanjing Zhangyu, face significant difficulties in obtaining financing from financial institutions. The borrower is 5% owned by a state-owned enterprise, which provides a degree of implicit government support and enhances its overall creditworthiness.
The arrangements under the guarantee contract enable Xinke and Nanjing Zhangyu to access and secure external financing by leveraging the borrower's existing credit line. Furthermore, the borrower has not charged any fees to the company or Xinke (as guarantor) during this financing process.
Given the circumstances, the financing structure outlined in the guarantee contract is beneficial for the ongoing operations and development of Xinke and Nanjing Zhangyu. This is expected to enhance the group's profitability and financial stability and support the continued growth of its two other main business segments: the integrated circuit and digital technology segment, and the new energy and services segment.
Additionally, as Nanjing Zhangyu's technology is crucial to the borrower's business development, the borrower has permitted its credit standing to be used to support Nanjing Zhangyu and Xinke. This arrangement further strengthens the mutual strategic cooperation between the group and the borrower and is anticipated to generate long-term synergies and value for the company and its shareholders.
The bank has agreed to provide a loan facility to the borrower. The principal amount under the loan agreement is RMB 50 million, which constitutes the first drawdown to the borrower. As this is a maximum amount guarantee contract, following the utilization of the initial RMB 50 million loan, another loan of up to RMB 50 million can be issued to the borrower under the same guarantee contract without requiring additional guarantees. Therefore, the maximum total principal amount of loans guaranteed under the contract is RMB 100 million.
Consequently, Xinke will provide a guarantee of up to RMB 120 million, equivalent to 120% of the maximum loan principal (RMB 100 million). The additional 20% is intended to cover potential related interest, default interest, penalties, and enforcement costs under the guarantee contract.
After considering the above, and through the implementation of appropriate safeguards and controls over the cash and bank balances generated by the lender under this and any future loan agreements—including the company's contractual arrangements to monitor the use of loan proceeds and hold them in designated repayment accounts—the risks borne by the group are manageable. The board believes the guarantee contract is established on normal or more favorable commercial terms, is fair and reasonable, and aligns with the overall interests of the company and its shareholders.
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