Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

hmvod Limited Capital/Financing Update 2020

May 19, 2020

51270_rns_2020-05-19_914b7304-d127-4f18-a85d-cd09be750d3b.pdf

Capital/Financing Update

Open in viewer

Opens in your device viewer

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement appears for information purpose only and does not constitute an invitation or offer to acquire, purchase, or subscribe for any securities of the Company.

hmvod Limited hmvod 視頻有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8103)

(1) PROPOSED SHARE CONSOLIDATION; AND

(2) PROPOSED RIGHTS ISSUE ON THE BASIS OF FIVE (5) RIGHTS SHARES FOR EVERY ONE (1) CONSOLIDATED SHARE HELD ON THE RECORD DATE

Financial adviser to the Company

Underwriter to the Rights Issue

==> picture [113 x 48] intentionally omitted <==

==> picture [148 x 49] intentionally omitted <==

– 1 –

(1) PROPOSED SHARE CONSOLIDATION

The Board intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every ten (10) issued and unissued Existing Shares of par value HK$0.001 each into one (1) Consolidated Share of par value of HK$0.01 each. The Share Consolidation is conditional upon, among other things, the approval by the Shareholders by way of poll at the EGM. Currently, the Shares are traded on the Stock Exchange in the board lot size of 2,000 Shares. Upon the Share Consolidation becoming effective, the board lot size for trading in the Consolidated Shares will remain as 2,000 Consolidated Shares.

As at the date of this announcement, the authorised share capital of the Company is HK$200,000,000 divided into 200,000,000,000 Existing Shares of HK$0.001 each, of which 142,256,878 Existing Shares have been issued and are fully paid or credited as fully paid. Upon the Share Consolidation becoming effective but before the completion of the Rights Issue and assuming no further Shares will be issued or repurchased from the date of this announcement to the effective date of the Share Consolidation, the authorised share capital of the Company will become HK$200,000,000 divided into 20,000,000,000 Consolidated Shares of HK$0.01 each, of which 14,225,687 Consolidated Shares (which are fully paid or credited as fully paid) will be in issue.

(2) PROPOSED RIGHTS ISSUE

The Board proposes to implement the Rights Issue on the basis of five (5) Rights Shares for every one (1) Consolidated Share held on the Record Date at the Subscription Price of HK$0.85 per Rights Share, to raise gross proceeds of approximately HK$60.5 million before expenses (assuming no further issue or repurchase of Shares or Consolidated Shares on or before the Record Date), by way of the Rights Issue of 71,128,435 Rights Shares to the Qualifying Shareholders.

The Company will provisionally allot to the Qualifying Shareholders five Rights Shares in nil-paid form for every one Consolidated Share in issue and held on the Record Date. The Rights Issue will not be available to the Non-Qualifying Shareholders.

The estimated net proceeds from the Rights Issue after deducting all necessary expenses will be approximately HK$56.9 million (assuming no further issue or repurchase of Shares or Consolidated Shares on or before the Record Date), which are intended to be applied in following manners: (i) approximately HK$47.6 million for repayment of the outstanding principal amount, interests and charges of the Group’s overdue loans which had been expired by over 7 months; and (ii) approximately HK$9.3 million for partial repayment of overdue bond payables and other accrued expenses of the Group.

– 2 –

The Rights Issue will be fully underwritten by the Underwriter. Details of the major terms and conditions of the Underwriting Agreement are set out in the section headed “THE UNDERWRITING AGREEMENT” in this announcement.

GEM LISTING RULES IMPLICATIONS

Since the proposed Rights Issue will increase the issued share capital or the market capitalisation of the Company by more than 50%, in accordance with Rule 10.29(1) of the GEM Listing Rules, the proposed Rights Issue must be made conditional on approval by the Independent Shareholders in general meeting by a resolution on which any controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the proposed Rights Issue.

As at the date of this announcement, the Company has no controlling Shareholder as defined under the GEM Listing Rules and none of the Directors and the chief executive of the Company and their respective associates holds any Share. Accordingly, no Shareholder shall abstain from voting in favour of the proposed resolution approving the Rights Issue at the EGM and no Director shall abstain from voting in favour of the Rights Issue at the meeting of the Board.

GENERAL

A circular containing, among other things, (i) further details of the Share Consolidation and the Rights Issue; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue; (iii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv) a notice convening the EGM, is expected to be despatched to the Shareholders on or before Friday, 26 June 2020.

The Company will despatch the Prospectus Documents containing, among other matters, details of the Rights Issue, to the Qualifying Shareholders. The Company will despatch the Prospectus (without the PAL(s) and EAF(s)) to the Non-Qualifying Shareholders for their information only.

– 3 –

WARNING OF THE RISKS OF DEALING IN THE EXISTING SHARES, THE CONSOLIDATED SHARES AND NIL-PAID RIGHTS SHARES

Shareholders and potential investors of the Company should note that the Rights Issue is conditional upon, among others, the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the section headed “Termination of the Underwriting Agreement” in this announcement). Accordingly, the Rights Issue may or may not proceed.

Any Shareholder or other person dealing in the Existing Shares, the Consolidated Shares and/or the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue are fulfilled (and the date on which the Underwriter’s right of termination of the Underwriting Agreement ceases) will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

Shareholders and potential investors are advised to exercise caution when dealing in the Existing Shares, the Consolidated Shares and/or the nil-paid Rights Shares. Any party who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s).

(1) PROPOSED SHARE CONSOLIDATION

The Board intends to put forward a proposal to the Shareholders to effect the Share Consolidation which involves the consolidation of every ten (10) issued and unissued Existing Shares of par value of HK$0.001 each into one (1) Consolidated Share of par value of HK$0.01 each. The Share Consolidation is conditional upon, among other things, the approval by the Shareholders by way of poll at the EGM. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as none of the Shareholders or their associates would have material interest in the Share Consolidation, no Shareholder would be required to abstain from voting in favour of the resolution relating to the Share Consolidation at the EGM.

– 4 –

Conditions of the Share Consolidation

The Share Consolidation is conditional upon the following:

  • (i) the passing of the ordinary resolution(s) by the Shareholders to approve the Share Consolidation at the EGM;

  • (ii) the compliance with all relevant procedures and requirements under the laws of the Cayman Islands (where applicable) and the GEM Listing Rules to effect the Share Consolidation; and

  • (iii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares arising from the Share Consolidation.

The Share Consolidation will become effective on Friday, 17 July 2020, being the second Business Day immediately following the fulfillment of the above conditions.

Effects of the Share Consolidation

As at the date of this announcement, the authorised share capital of the Company is HK$200,000,000 divided into 200,000,000,000 Existing Shares of HK$0.001 each, of which 142,256,878 Existing Shares have been issued and are fully paid or credited as fully paid. Upon the Share Consolidation becoming effective but before the completion of the Rights Issue and assuming no further Shares will be issued or repurchased from the date of this announcement to the effective date of the Share Consolidation, the authorised share capital of the Company will become HK$200,000,000 divided into 20,000,000,000 Consolidated Shares of HK$0.01 each, of which 14,225,687 Consolidated Shares (which are fully paid or credited as fully paid) will be in issue.

Upon the Share Consolidation becoming effective, the Consolidated Shares will rank pari passu in all respects with each other. No fractional Consolidated Shares will be issued by the Company. Any fractional entitlements of the Consolidated Shares will be aggregated and sold for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Shares regardless of the number of share certificates held by such holder.

Currently, the Shares are traded on the Stock Exchange in the board lot size of 2,000 Shares. Upon the Share Consolidation becoming effective, the board lot size for trading in the Consolidated Shares will remain as 2,000 Consolidated Shares.

– 5 –

Other than the expenses to be incurred in relation to the Share Consolidation, the implementation thereof will not alter the underlying assets, business operations, management or financial position of the Group or the interests or rights of the Shareholders, save for any fractional Consolidated Shares which may arise.

Odd lots arrangements and matching services

In order to alleviate the difficulties arising from the existence of odd lots of the Consolidated Shares arising from the Share Consolidation, the Company will procure an arrangement with an agent to stand in the market to provide matching services for sale and purchase of odd lots of the Consolidated Shares on a best effort basis. Further details in respect of the odd lots arrangements will be set out in the circular to be despatched to the Shareholders in relation to, among others, the Share Consolidation.

Holders of odd lots of the Consolidated Shares should note that successful matching of the sale and purchase of odd lots of the Consolidated Shares are not warranted. Any Shareholder who is in any doubt about the odd lots arrangements is recommended to consult his/her/ its own professional advisers.

Exchange of share certificates

Subject to the Share Consolidation having become effective, Shareholders may, during the period from Friday, 17 July 2020 to Monday, 24 August 2020, submit the existing share certificates for the Existing Shares to the Registrar in Hong Kong, Union Registrars Limited at Suites 3301[–] 04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong, to exchange, at the expense of the Company, for new share certificates for the Consolidated Shares. Thereafter, existing share certificates for Existing Shares will continue to be good evidence of legal title and may be exchanged for new share certificates for Consolidated Shares at the expense of the Shareholders on payment of a fee of HK$2.50 (or such higher amount as may be allowed by the Stock Exchange from time to time) for each existing share certificate cancelled or each new share certificate issued for Consolidated Shares (whichever is higher) but are not acceptable for delivery, trading and settlement purposes.

The new share certificates for the Consolidated Shares will be issued in Beige colour in order to distinguish them from the existing Pink colour.

– 6 –

Listing and Dealings

Application will be made to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Consolidated Shares in issue arising from the Share Consolidation and all necessary arrangements will be made for the Consolidated Shares to be admitted into CCASS.

REASONS FOR THE SHARE CONSOLIDATION

Under Rule 17.76 of the GEM Listing Rules, where the market price of the securities of an issuer approaches the extremities of HK0.01 or HK$9,995.00, the issuer may be required either to change the trading method or to proceed with a consolidation or splitting of its securities.

Pursuant to the “Guide on Trading Arrangements for Selected Types of Corporate Actions” issued by the Hong Kong Exchanges and Clearing Limited on 28 November 2008 and updated on 30 August 2019 (the “ Guideline ”), the expected board lot value should be greater than HK$2,000 per board lot taking into account the minimum transaction costs for a securities trade. As at the date of this announcement, the closing price of each Existing Share is HK$0.236, with a board lot size of 2,000 Existing Shares, the Existing Shares are trading under HK$2,000 per board lot.

In order to reduce transaction and registration costs incurred by the Shareholders and investors of the Company, the Board proposes to implement the Share Consolidation. It is expected that the Share Consolidation will increase the value of each board lot of the Consolidated Shares to more than HK$2,000.

The Board believes that the Share Consolidation is in the interests of the Company and the Shareholders as a whole.

– 7 –

(2) PROPOSED RIGHTS ISSUE

The Board proposes, subject to, amongst others, the Share Consolidation becoming effective, the Rights Issue with the terms set out as follows:

Issue statistics

Basis of the Rights Issue : five (5) Rights Shares for every one (1) Consolidated
Share held by the Qualifying Shareholders at the
close of business on the Record Date
Subscription Price : HK$0.85 per Rights Share
Net price per Rights Share : Approximately HK$0.80 per Rights Share
(i.e. Subscription Price less
cost and expenses incurred in
the Rights Issue)
Number of Shares in issue as at : 142,256,878 Existing Shares
the date of this announcement
Number of Consolidated : 14,225,687 Consolidated Shares (assuming no
Shares in issue upon further issue or repurchase of Shares up to the
the Share Consolidation effective date of the Share Consolidation)
becoming effective
Number of Rights Shares : 71,128,435 Rights Shares (assuming no further
to be issued pursuant to issue or repurchase of the Shares or Consolidated
the Rights Issue Shares on or before the Record Date)
The aggregate nominal value of the Rights Shares
will be HK$711,284.35.
Total number of Consolidated : 85,354,122 Consolidated Shares (assuming
Shares in issue upon no further issue or repurchase of Shares or
completion of the Rights Issue Consolidated Shares on or before the Record Date)

– 8 –

  • Gross proceeds from the : Approximately HK$60.5 million before expenses Rights Issue (assuming no further issue or repurchase of Shares or Consolidated Shares on or before the Record Date)

  • Right of excess applications : Qualifying Shareholders may apply for Rights Shares in excess of their provisional allotment

The Company has no outstanding convertible bonds, options, derivatives, warrants, conversion rights or other similar rights entitling holders thereof to subscribe for or convert into or exchange for new Shares as at the date of this announcement.

Assuming no further issue or repurchase of Shares or Consolidated Shares on or before the Record Date, the 71,128,435 Rights Shares to be issued pursuant to the terms of the Rights Issue represent 500% of the total number of issued Consolidated Shares upon the Share Consolidation becoming effective and approximately 83.3% of the total number of issued Consolidated Shares as enlarged by the issue of the Rights Shares.

Undertakings

The Company has undertaken in the Underwriting Agreement that the Company shall not issue new Shares under the general mandate and shall not grant new share options under the share option scheme from the date of the Underwriting Agreement up to and including the Record Date (both days inclusive).

As at the date of this announcement, the Company has not received any information or irrevocable undertaking from any substantial Shareholder of their intention in relation to the Rights Shares to be provisionally allotted to them under the Rights Issue.

The Subscription Price

The Subscription Price of HK$0.85 per Rights Share is payable in full by a Qualifying Shareholder upon acceptance of the relevant provisional allotment of the Rights Shares under the Rights Issue, upon an application of excess Rights Shares, or when a transferee of the nil-paid Rights Shares subscribes for the Rights Shares.

– 9 –

The Subscription Price represents:

  • (i) a discount of approximately 64.0% to the theoretical closing price of HK$2.360 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the closing price of HK$0.236 per Existing Share as quoted on the Stock Exchange on the Last Trading Day;

  • (ii) a discount of approximately 77.5% to the theoretical closing price of HK$3.780 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the average closing price of HK$0.378 per Existing Share as quoted on the Stock Exchange for the five (5) consecutive trading days prior to and excluding the Last Trading Day;

  • (iii) a discount of approximately 73.8% to the theoretical closing price of approximately HK$3.240 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the average closing price of approximately HK$0.324 per Existing Share as quoted on the Stock Exchange for the ten (10) consecutive trading days prior to and excluding the Last Trading Day; and

  • (iv) a discount of approximately 22.9% to the theoretical ex-rights price of approximately HK$1.102 per Consolidated Share (after taking into account the effect of the Share Consolidation) based on the closing price of HK$0.236 per Existing Share as quoted on the Stock Exchange on the Last Trading Day.

The Subscription Price was determined after arm’s length negotiation between the Company and the Underwriter with reference to, among others, the market price of the Existing Shares under the prevailing market conditions, the financial condition of the Company, the consecutive loss-making history of the Group over the past five years, and the reasons and benefits of Rights Issue as discussed in the section headed “REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS” in this announcement.

The Company has approached a total of four financial institutions to see if they were interested to support any fundraising exercises of the Company without proposing any specific terms in the first place. However, except for the Underwriter, no positive feedbacks were received by the Company from the other three financial institutions. The Underwriter is the only available securities house who agrees to provide underwriting service for the Rights Issue at current fund-raising size on a fully-underwritten basis after considering the Company’s business scale, financial performance of the Group and recent market sentiment.

– 10 –

The subscription ratio and the Subscription Price were determined between the Company and the Underwriter after arm’s length negotiation. During the course of negotiation, based on the funding needs of the Group of around HK$60 million, prior to arriving at the current structure of the Rights Issue, the Company has proposed different structures of rights issue with lower subscription ratio and higher subscription prices (the “ Proposals ”). However, the Underwriter refused the Proposals. After further discussion, the Underwriter agreed with the terms of the Rights Issue, including the subscription basis of 5 Rights Shares for every 1 Consolidated Share and the Subscription Price of HK$0.85. After balancing the funding needs of the Company of around HK$60 million and request of the Underwriter for deeper discount in order for the Underwriter to provide underwriting service on a fullywritten basis so as to provide the Group with the certainty of the required minimum level of fund for settlement of its matured indebtedness, the Company and the Underwriter agreed with the current structure of the Rights Issue. The Directors are of the view that the present terms and structure of the Rights Issue reflect the best commercial deal that the Company could negotiate with the Underwriter.

Taking into account that (i) the fund raising size of the Rights Issue of HK$60.5 million is approximately 80.1% more than the market capitalization of approximately HK$33.6 million of the Company as at the date of the announcement, it is necessary to set the Subscription Price at relatively deep discount for inducing the Underwriter to provide underwriting service for the Rights Issue on a fully-underwritten basis and attracting all of the Qualifying Shareholders to participate in the Rights Issue; (ii) the discount of the Subscription Price gives each Qualifying Shareholder the option to maintain their respective shareholding in the Company at a relatively low price as compared to the prevailing market price, allowing them to have greater flexibility in determining the extent of their participation in the Rights Issue; and (iii) present subscription basis can avoid fractional Consolidated Shares and minimize the potential of odd lots problem, the Board considers that the terms of the Rights Issue, including the Subscription Price and the subscription basis are fair and reasonable and in the best interests of the Company and the Shareholders as a whole.

Status of the Rights Shares

The Rights Shares (when allotted, fully paid or credited as fully paid and issued) will rank pari passu in all respects among themselves and with the Consolidated Shares in issue on the date of allotment and issue of the Rights Shares. Holders of the fully paid Rights Shares will be entitled to receive all future dividends and distributions which may be declared, made or paid on or after the date of allotment and issue of the fully paid Rights Shares. Dealings in the Rights Shares in both their nil-paid and fully-paid forms will be subject to payment of stamp duty, Stock Exchange trading fee, transaction levy, investor compensation levy or any other applicable fees and charges in Hong Kong.

– 11 –

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. To qualify for the Rights Issue, a Shareholder must be registered as a member of the Company as at the close of business on the Record Date and not be a Non-Qualifying Shareholder. In order to be registered as members of the Company prior to the close of business on the Record Date, all transfers of the Consolidated Shares (together with the relevant share certificate(s)) must be lodged with the Registrar in Hong Kong, Union Registrars Limited at Suites 3301[–] 04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong, for registration no later than 4:00 p.m. (Hong Kong time) on Tuesday, 21 July 2020.

It is expected that the last day of dealings in the Consolidated Shares on a cum-rights basis is Friday, 17 July 2020, and the Consolidated Shares will be dealt with on an ex-rights basis from Monday, 20 July 2020.

Subject to the Share Consolidation having become effective, the passing of the resolution to approve the Rights Issue by the Independent Shareholders at the EGM and the registration of the Prospectus Documents in accordance with the applicable laws and regulations, the Company will despatch the Prospectus Documents to the Qualifying Shareholders on the Prospectus Posting Date and will despatch the Prospectus (without the PAL(s) and the EAF(s)) to the Non-Qualifying Shareholders for their information only.

Closure of register of members

The register of members of the Company will be closed from Wednesday, 22 July 2020 to Tuesday, 28 July 2020 (both days inclusive) for determining the entitlements to the Rights Issue. No transfer of the Consolidated Shares will be registered during the above book closure period.

Basis of provisional allotments

The Rights Shares will be allotted on the basis of five (5) Rights Shares for every one (1) Consolidated Share held by the Qualifying Shareholders as at the close of business on the Record Date.

Acceptance for all or any part of a Qualifying Shareholder’s provisional allotment should be made only by completing a PAL and lodging the same with a remittance for the Rights Shares being accepted with the Registrar by the Latest Time for Acceptance.

– 12 –

Rights of Overseas Shareholders (if any)

The Prospectus Documents to be issued in connection with the Rights Issue will not be registered or filed under the securities law of any jurisdiction other than Hong Kong. Overseas Shareholders may not be eligible to take part in the Rights Issue as explained below.

The Board will comply with Rule 17.41(1) of the GEM Listing Rules and make necessary enquiries regarding the feasibility of extending the Rights Issue to the Overseas Shareholders (if any) under the laws of the relevant overseas jurisdictions and the requirements of the relevant regulatory bodies or stock exchanges. If, based on legal advice, the Board is of the opinion that it would be necessary or expedient not to offer the Rights Shares to any Overseas Shareholders on account either of the legal restrictions under the laws of relevant place(s) or the requirements of the relevant overseas regulatory body or stock exchange, no provisional allotment of the nil-paid Rights Shares or allotment of fully-paid Rights Shares will be made to such Overseas Shareholders. In such circumstances, the Rights Issue will not be extended to the Non-Qualifying Shareholders. The basis for excluding the NonQualifying Shareholders, if any, from the Rights Issue will be set out in the Prospectus to be issued.

Arrangements will be made for the Rights Shares, which would otherwise have been provisionally allotted to the Non-Qualifying Shareholders, to be sold in their nil-paid form as soon as practicable after dealings in the nil-paid Rights Shares commence, if a premium (net of expenses) can be obtained. The proceeds of such sale, less expenses, will be paid pro rata (but rounded down to the nearest cent) to the Non-Qualifying Shareholders in Hong Kong dollars, except that the Company will retain individual amounts of less than HK$100 for its own benefit. Any unsold entitlements of the Non-Qualifying Shareholders will be made available for excess application by the Qualifying Shareholders.

Overseas Shareholders should note that they may or may not be entitled to the Rights Issue, subject to the results of enquiries made by the Directors pursuant to Rule 17.41(1) of the GEM Listing Rules. Accordingly, Overseas Shareholders should exercise caution when dealing in the Shares or Consolidated Shares.

– 13 –

Application for the excess Rights Shares

Qualifying Shareholders shall be entitled to apply, by way of excess application, for (i) the Rights Shares representing the entitlement of the Non-Qualifying Shareholders and which cannot be sold at a net premium; and (ii) any Rights Shares provisionally allotted but not validly accepted by the Qualifying Shareholders or transferees of nil-paid Rights Shares. Applications for the excess Rights Shares may be made by completing the EAF and lodging the same with a separate remittance for the excess Rights Shares being applied for with the Registrar by the Latest Time for Acceptance.

The Board will allocate the excess Rights Shares at its discretion, but on a fair and equitable basis as far as practicable on the following principles:

  • (i) no preference will be given to applications for topping-up odd-lot holdings to wholelot holdings as the giving of such preference may potentially be abused by certain investors by splitting their Shares and thereby receiving more Rights Shares than they would receive if such preference is not given, which is an unintended and undesirable result; and

  • (ii) the excess Rights Shares will be allocated to the applicants on a pro rata basis based on the number of excess Rights Shares applied for by them. No reference will be made to Rights Shares subscribed through PALs, or the number of Shares held by the Qualifying Shareholders.

Any Rights Shares not accepted for by the Qualifying Shareholders or transferees of nilpaid Rights Shares and not taken by excess application will be taken up by the Underwriter pursuant to the terms and conditions of the Underwriting Agreement.

Beneficial owners of Consolidated Shares whose Consolidated Shares are held by a nominee company (including HKSCC Nominees Limited) should note that for the purpose of the Rights Issue, the Board will regard the nominee company as a single Shareholder according to the register of members of the Company. Accordingly, the beneficial owners of Consolidated Shares whose Consolidated Shares are registered in name of nominee companies should note that the aforesaid arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually and are advised to consider whether they would like to arrange for registration of the relevant Consolidated Shares in the name of the beneficial owner(s) prior to the Record Date.

– 14 –

For those beneficial owners of Consolidated Shares whose Consolidated Shares are held by their nominee(s) (including HKSCC Nominees Limited) and who would like to have their names registered on the register of members of the Company, they must lodge all necessary documents with the Registrar in Hong Kong, Union Registrars Limited at Suites 3301[–] 04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong, for completion of the relevant registration not later than 4:00 p.m. (Hong Kong time) on Tuesday, 21 July 2020.

Certificates of the Rights Shares and refund cheques for the Rights Issue

Subject to fulfilment of the conditions of the Rights Issue, share certificates for the fullypaid Rights Shares are expected to be sent on or before Thursday, 20 August 2020 to those entitled thereto by ordinary post, at their own risk, to their registered addresses. If the Underwriting Agreement is terminated or not becoming unconditional, refund cheques will be despatched on or before Thursday, 20 August 2020 by ordinary post, at the respective Shareholders’ own risk, to their registered addresses. Refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted on or before Thursday, 20 August 2020, by ordinary post to the applicants, at their own risk, to their registered addresses.

Fractional entitlement to the Rights Shares

On the basis of provisional allotment of five (5) Rights Shares for every one (1) Consolidated Share held by the Qualifying Shareholders on the Record Date, no fractional entitlement to the Rights Shares will arise under the proposed Rights Issue.

Taxation

Shareholders are advised to consult their professional advisers if they are in any doubt as to the taxation implications of the receipt, purchase, holding, exercising, disposing of or dealing in, the nil-paid Rights Shares or the Rights Shares and, regarding the NonQualifying Shareholders, their receipt of the net proceeds, if any, from sale of the nil-paid Rights Shares on their behalf.

– 15 –

Application for listing

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Rights Shares (in both nil-paid and fully-paid forms) to be issued and allotted pursuant to the Rights Issue. No part of the securities of the Company is listed or dealt in, and no listing of or permission to deal in any such securities is being or is proposed to be sought, on any other stock exchanges.

The nil-paid Rights Shares shall have the same board lot size as the Consolidated Shares (i.e. 2,000 Consolidated Shares in one board lot).

Subject to the granting of the listing of, and the permission to deal in, the Rights Shares (in both their nil-paid and fully-paid forms) on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares (in both their nil-paid and fully-paid forms) will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in their nil-paid and fully-paid forms on the Stock Exchange, or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. Shareholders should seek advice from their licensed securities dealer(s) or other professional adviser(s) for details of those settlement arrangements and how such arrangements will affect their rights and interests.

– 16 –

THE UNDERWRITING ARRANGEMENT

The Rights Shares will be fully underwritten by the Underwriter in accordance with the terms of the Underwriting Agreement as described below.

Underwriting Agreement

Date : 19 May 2020 (after trading hours) Issuer : The Company Underwriter : Win Wind Securities Limited

The Underwriter is a licensed corporation carrying out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) regulated activities under the SFO and its ordinary course of business includes underwriting of securities.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, the Underwriter and its associates do not hold any Shares, and the Underwriter and its ultimate beneficial owners are Independent Third Parties.

Number of Rights Shares : 71,128,435 Rights Shares underwritten by the Underwriter Underwriting Commission : 3% of the aggregate Subscription Price in respect of the Underwritten Shares

– 17 –

The terms of the Underwriting Agreement (including the commission rate) were determined after arm’s length negotiation between the Company and the Underwriter by reference to the financial position of the Group, the size of the Rights Issue, the current and expected market condition and the prevailing market rate. The Directors (save for the independent non-executive Directors who will form their views after considering the advice of the independent financial adviser) consider the entering into of the Underwriting Agreement with the Underwriter and the terms of the Underwriting Agreement (including the underwriting commission) are fair and reasonable and in the interest of the Company and the Shareholders as a whole.

Subject to the fulfilment of the conditions (or any waiver, as the case may be, by the Underwriter) contained in the Underwriting Agreement and provided that the Underwriting Agreement is not terminated prior to the Latest Time for Termination in accordance with the terms thereof, the Underwriter has agreed to subscribe or procure the subscription for all Underwritten Shares that are not otherwise taken up.

Termination of the Underwriting Agreement

If at any time on or before the Latest Time for Termination:

  • (A) the Underwriter shall become aware of the fact that, or shall have reasonable cause to believe that any of the warranties in the Underwriting Agreement was untrue, inaccurate, misleading or breached, and in each case the same is (in the reasonable opinion of the Underwriter) material in the context of the Rights Issue; or

  • (B) there shall be:

  • (i) the introduction of any new regulation or any change in existing law or regulation (or the judicial interpretation thereof) or other occurrence of any nature whatsoever after the signing of Underwriting Agreement;

  • (ii) the occurrence of any local, national or international event or change (whether or not forming part of a series of events or changes occurring after the signing of the Underwriting Agreement or continuing after the signing of the Underwriting Agreement) of a political, military, financial, economic or other nature, or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets;

  • (iii) any material adverse change after the signing of the Underwriting Agreement in the business or in the financial or trading position of any member of the Group;

– 18 –

  • (iv) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic, terrorism, strike or lock-out occurred after the signing of the Underwriting Agreement;

  • (v) after signing of the Underwriting Agreement, there occurs or comes into effect the imposition of any moratorium, suspension or material restriction on trading in the Shares generally on the Stock Exchange whether due to exceptional financial circumstances or otherwise;

  • (vi) there is, after signing of the Underwriting Agreement, any change or any development involving a prospective change in market conditions (including, without limitation, a change in fiscal or monetary policy or foreign exchange or currency markets, suspension or restriction of trading in securities, imposition of economic sanctions, on Hong Kong, the People’s Republic of China or other jurisdiction relevant to any member of the Group and a change in currency conditions for the purpose of this paragraph includes a change in the system under which the value of the Hong Kong currency is pegged with that of the currency of the United States of America) occurs; or

  • (vii) the circular and/or the Prospectus when published contain information (either as to business prospects or the condition of the Group or as to its compliance with any laws or the GEM Listing Rules or the Takeovers Code or any applicable regulations) which has not prior to the date hereof been publicly announced or published by the Company in compliance with the GEM Listing Rules,

which event or events is or are in the absolute opinion of the Underwriter:

  • (a) likely to have a material adverse effect on the business or financial or trading position or prospects of the Group as a whole; or

  • (b) likely to have a material adverse effect on the success of the Rights Issue or the level of the Rights Shares “taken up”; or

  • (c) make it inappropriate, inadvisable or inexpedient to proceed further with the Rights Issue,

then the Underwriter may, by notice in writing given to the Company on or before the Latest Time for Termination, rescind the Underwriting Agreement.

– 19 –

If the Underwriter terminates the Underwriting Agreement, the Rights Issue will not proceed. A further announcement would be made by the Company if the Underwriting Agreement is terminated by the Underwriter.

Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions being fulfilled or waived (as appropriate):

  • (1) the passing of necessary resolution(s) at the EGM to approve the Rights Issue by the Independent Shareholders;

  • (2) the Share Consolidation becoming effective;

  • (3) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment) and not having withdrawn or revoked the listing of and permission to deal in the Rights Shares (in their nil-paid and fully-paid forms);

  • (4) the delivery to the Stock Exchange for authorization and the registration with the Registrar of Companies in Hong Kong respectively each of the Prospectus Documents (and all other documents required to be attached thereto) and otherwise in compliance with the GEM Listing Rules and the Companies (Winding Up and Miscellaneous Provision) Ordinance not later than the Prospectus Posting Date;

  • (5) the posting of the Prospectus Documents to the Qualifying Shareholders by no later than the Prospectus Posting Date;

  • (6) the obligations of the Underwriter becoming unconditional and that the Underwriting Agreement is not terminated in accordance with its terms; and

  • (7) compliance with and performance of all undertakings and obligations of the Company under the Underwriting Agreement and the representations and warranties given by the Company under the Underwriting Agreement remaining true, correct and not misleading in all material respects.

The conditions precedent, save and except paragraph (7) above which can only be waived by the Underwriter, are incapable of being waived.

– 20 –

The Company shall use all reasonable endeavours to procure the fulfilment of the conditions precedent set out in paragraphs (1) to (5) by the Latest Time for Acceptance. If the conditions precedent set out in the above paragraphs are not satisfied (or, if applicable, waived by the Underwriter) by the Latest Time for Acceptance and/or the condition set out in paragraph (7) does not remain fulfilled (unless waived by the Underwriter under the terms of the Underwriting Agreement) up to the Latest Time for Termination, the Underwriting Agreement shall terminate (save in respect of the surviving provisions in relation to fees and expenses, indemnity, notices and governing law) and no party hereto will have any claim against any other party for cost, damages, compensation or otherwise (save in respect of any rights or obligations which may have accrued under the Underwriting Agreement prior to such termination), and the Rights Issue will not proceed.

REASONS FOR AND BENEFITS OF THE RIGHTS ISSUE AND USE OF PROCEEDS

The Group principally engages in provision of professional services, over-the-top (“ OTT ”) services, money lending business and proprietary trading. The professional services segment involves cyber security services and solutions. The OTT services segment involves provision of multi-media related services and content to customers in Hong Kong and Taiwan via its own digital video rental platform.

The gross proceeds of the Rights Issue will be approximately HK$60.5 million and the estimated net proceeds of the Rights Issue, after deducting the related expense, will be approximately HK$56.9 million. The Company intends to apply the net proceeds from the proposed Rights Issue as follows:

  • (i) approximately HK$47.6 million for the repayment of the outstanding principal amount, interests and charges of the Group’s overdue loans (the “ Overdue Loans ”) which had been expired by over 7 months; and

  • (ii) approximately HK$9.3 million for partial repayment of overdue bond payables (the “ Overdue Bond ”) and other accrued expenses of the Group.

– 21 –

Details of the Overdue Loans and the Overdue Bond (collectively, the “ Matured Indebtedness ”) are set out below:

Creditors
Nature of
the debts

Overdue Loans
A
Overdue Loans
B
Overdue Loans
Sub-total
Overdue Bond
C
Overdue Bond
Total:		 Outstanding
principal
amount
Maturity date
Interest
rate
Outstanding
accrued
interest and
charges as at
29 February
2020
Total
outstanding
amount as at
29 February
2020
(HK$’000)
(p.a.)
(HK$’000)
(HK$’000)
35,000
26 September 2019
12%
6,030
41,030
5,000
8 May 2019
15%
1,588
6,588
40,000
7,618
47,618
9,800
14 September 2019
6.25%
282
10,082
49,800
7,900
57,700		 Outstanding
principal
amount
Maturity date
Interest
rate
Outstanding
accrued
interest and
charges as at
29 February
2020
Total
outstanding
amount as at
29 February
2020
(HK$’000)
(p.a.)
(HK$’000)
(HK$’000)
35,000
26 September 2019
12%
6,030
41,030
5,000
8 May 2019
15%
1,588
6,588
40,000
7,618
47,618
9,800
14 September 2019
6.25%
282
10,082
49,800
7,900
57,700
47,618
10,082
57,700

As at 29 February 2020, the Matured Indebtedness with aggregate outstanding amount of approximately HK$57.7 million had already been expired for over 7 months. As such, the Group has an imminent need of funding to cope with the Matured Indebtedness.

For the Overdue Loans, the Company has been negotiating with the Creditor A and the Creditor B since May 2019 for loan extension based on existing terms. In February 2020, the Creditor A and the Creditor B indicated that they were unwilling to extend the maturity date and would like the Overdue Loans to be settled by cash in due course and request for prompt settlement.

In respect of the Overdue Bond, the Company has been negotiating with the Creditor C since November 2019. During the negotiation, the Creditor C verbally agreed with the settlement by a combination of cash and loan capitalization (the “ Overdue Bond Proposal ”). In February 2020, the Group and the Creditor C reached the preliminary terms for the Overdue Bond Proposal, which would render a funding requirement of the Group of around HK$6 million to HK$8 million for the cash settlement under the Overdue Bond Proposal.

– 22 –

The Directors are aware that the Group has other outstanding loans (the “ Other Outstanding Loans ”) bearing higher interest rate as compared to the Matured Indebtedness. However, the Directors are of the view that there is no immediate need to repay the Other Outstanding Loans. The details of the terms of the Other Outstanding Loans are set out as below:

Loans D E F
Principal amount(HK$’000) 17,000 10,005 527
Maturity date 26 June 2020 15 July 2022 16 July 2022
(Note)
Interest rate 8% 4.85% 4.85%
Agreement date 27 June 2018 16 July 2015 17 July 2015

Note: The Loan D was initially repayable on 26 May 2019 and the maturity date of the Loan D was subsequently extended for another 13 months to 26 June 2020.

It is the Group’s intention to extend the Loan D rather than repaying it. In early March 2020, the Group has commenced the negotiation with the creditor of the Loan D (the “ Creditor D ”) for extension or renewal for a term of around one year and positive feedback is received. The Company has established good relationship with the Creditor D and it had extended the maturity date before. Therefore, the Directors expect that the Creditor D will be willing to extend the maturity date. For the Loan E and the Loan F, they are not yet matured until July 2022. As such, the Directors consider that there is no urgency for the Group to settle the Other Outstanding Loans.

As disclosed in the third quarterly report for the nine months ended 31 December 2019, the Group recorded a consolidated profit of approximately HK$1.01 million for the nine months ended 31 December 2019 compared to loss of HK$0.74 million for the corresponding period of 2018. However, the bank balances and cash of the Group were merely HK$1.6 million as at 31 December 2019. In addition, the Group recorded net current liabilities and net liabilities of approximately HK$143.9 million and HK$87.6 million respectively as at 30 September 2019.

In view of the current challenging financial position of the Group, it would constrain the business development of the Group. Besides, the annual finance cost of the Matured Indebtedness which amounts to approximately HK$5.6 million, has been becoming a heavy burden on the Group’s operation. As such, the Directors consider it is essential to trim down the debt level of the Group to relieve its financial burden.

– 23 –

Fund-raising alternatives

The Board has considered various fund-raising alternatives before resolving to the Rights Issue, including but not limited to debt financing, placing of new shares and open offer.

It is the Group’s intention to obtain bank financing which incurs lower interest rate for re-financing the Matured Indebtedness. The Company has approached two principal banks of the Group in Hong Kong (the “ Principal Banks ”) for exploring the possibility of obtaining new banking facilities. However, given the volatile market conditions and the consecutive loss-making financial performance of the Group, the Principal Banks turned down (the “ Banks Rejection ”) the request of the Company for banking facilities at an early stage and there was no further negotiation of scale or terms between the Company and the Principal Banks.

The Directors consider that it would be difficult for the Company to obtain loans from other non-banking financial institution (the “ Non-Banking Fls ”) due to the Company lack of collateral acceptable to the Non-Banking FIs. Moreover, based on the past experience of the Directors, even for secured loan financing with acceptable collateral (such as property) from the Non-Banking FIs, it will still result in an expectedly high interest rate ranging from at least 12% to 18% per annum under prevailing market conditions. The Group is reluctant to obtain loan financing from the Non-Banking FIs which generally charge higher interest rates than banks. As such, after the Banks Rejection, the Company did not further approach the Non-Banking Fls.

The Directors have also considered utilizing the existing general mandate of 28,451,375 Shares. The Directors consider that by applying relevant net proceeds of placing for partial settlement of the Matured Indebtedness, it would reduce scale of the Rights Issue and lower the overall price discount and dilution effect in conducting fund raising activities. During April 2020, the Company has approached three securities houses to explore if they were interested to support any fundraising exercises of the Company without proposing any specific terms in the first place. However, in view of the existing weak financial position of the Group, low market capitalization of the Group, none of the securities house has any interest on any possible fundraising activities.

The Board considers that the Rights Issue would be more favourable and attractive to the Shareholders than an open offer because it would allow Shareholders to have more flexibility in dealing with the Consolidated Shares and the nil-paid rights attaching thereto.

– 24 –

Benefits of the Rights Issue

The Board is of the view that the Rights Issue represents an opportunity for the Company to strengthen its financial position after having considered that:

  • (i) tight cash position alongside with net current liabilities and net deficit position of the Group as at 30 September 2019;

  • (ii) the Rights Issue offers all the Qualifying Shareholders an equal opportunity to participate in the enlargement of the capital base of the Company and enables the Qualifying Shareholders to maintain their proportionate interests in the Company and continue to participate in the future development of the Company should they wish to do so;

  • (iii) the discount of the Subscription Price to the prevailing market price in order to enhance the attractiveness of the Rights Issue and it is the Company’s objective to encourage the participation of Qualifying Shareholders in the Rights Issue;

  • (iv) after considering other alternative fund-raising methods, it is prudent to finance the Group’s long-term growth by long-term financing, preferably in the form of equity which will not increase the Group’s finance costs. In addition, the Board believes that the Rights Issue will enable the Group to strengthen its capital base and enhance its financial position for future strategic investments as and when such opportunities arise; and

  • (v) to allow the Shareholders to have more flexibility in dealing with the Consolidated Shares and the nil-paid rights attaching thereto.

Therefore, the Board considered that raising funds by way of the Rights Issue is more cost effective and efficient.

Theoretical dilution effect

The Company has not conducted any rights issue, open offer and/or specific mandate placing within the 12-month period immediately preceding the date of this announcement, or prior to such 12-month period where dealing in respect of the Shares issued pursuant thereto commenced within such 12-month period, nor has it issued any bonus securities, warrants or other convertible securities as part of such rights issue, open offers and/or specific mandate placings within such 12-month period.

– 25 –

The Rights Issue will result in a theoretical dilution effect (as defined under Rule 10.44A) of over 25%, but in view of the following factors, the Board (save for the independent nonexecutive Directors who will form their view after receiving and considering the advice by the independent financial adviser) considers that the terms and conditions of the Rights Issue and the Underwriting Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

(i) Financial difficulties of the Group

The Group is in financial difficulties although the Company published a positive profit alert announcement on 10 February 2020. According to the interim report of the Company for the six months ended 30 September 2019, (i) as at 30 September 2019, the Group recorded net current liabilities and net liabilities which amounted to approximately HK$143.9 million and HK$87.6 million respectively; (ii) the Group merely maintained bank balances and cash of approximately HK$1.7 million as at 30 September 2019, representing a drop of approximately 34.6% as compared to 31 March 2019; and (iii) among the Group’s total assets of approximately HK$91.4 million as at 30 September 2019, goodwill and intangible assets which accounted for over 60% of the Group’s total assets are not readily realizable into cash independently due to their intangible nature. Besides, as at 29 February 2020, the Matured Indebtedness amounted to approximately HK$57.7 million. With the current financial position of the Group, the Directors considered that the Group has imminent funding needs to cope with the Matured Indebtedness and it is necessary to conduct fund-raising activities to alleviate the financial burden. The proposed Rights Issue will be a rescue plan for the Company in order to avoid a potential liquidation of the Company.

(ii) Going concern of the Group

The Company’s auditor issued a disclaimer of opinion on the consolidated financial statements of the Group for the year ended 31 March 2019 which stated the existence of multiple uncertainties cast significant doubt on the Group’s ability to continue as a going concern related to, among others, the Group’s net current liabilities of approximately HK$151,185,000 and capital deficiency of approximately HK$91,602,000 as at 31 March 2019.

However, those Qualifying Shareholders who do not take up the Rights Shares to which they are entitled and Non-Qualifying Shareholder(s) should note that their shareholdings will be diluted.

– 26 –

EFFECTS ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following table sets out the possible changes in the shareholding structure of the Company arising from the proposed Share Consolidation and Rights Issue which are for illustrative purpose only.

Set out below is the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately after the Share Consolidation becoming effective but before completion of the Rights Issue; and (iii) immediately after completion of the Rights Issue, assuming no further issue or repurchase of Shares or Consolidated Shares up to completion of the Rights Issue save for the Rights Shares:

Immediately after completion of the Rights Issue Immediately after completion of the Rights Issue
Immediately after Assuming no
the Share Consolidation Assuming all Shareholders take up any
becoming effective but Shareholders take up of the Rights Shares and
As at the date of before completion of their respective allotment of the Underwriter takes up
this announcement the Rights Issue Rights Shares in full the Rights Shares in full
No. of No. of No. of No. of
Existing Consolidated Consolidated Consolidated
Shares Approx. % Shares
Approx. %		 Shares
Approx. %		 Shares
Approx. %

Public Shareholders

Underwriter,
sub-underwriter(s)
and/or subscriber(s)
procured by them
(Note 1)
Other public Shareholders
Total		 –
142,256,878
142,256,878		 –
100.0
100.0		 –
14,225,687
14,225,687		 –
100.0
100.0		 –
85,354,122
85,354,122		 –
100.0
100.0		 71,128,435
14,225,687
85,354,122		 83.3
16.7
100.0

Notes:

  • (1) Pursuant to the Underwriting Agreement, the Underwriter undertakes to the Company that in the event of it being called upon to subscribe for or procure subscribers for the Untaken Shares:

  • (i) it will not and shall procure that the sub-underwriter and subscribers procured by them, together with parties acting in concert (within the meaning of the Takeovers Code) with each of them, will not own 10% or more of the voting rights of the Company immediately after completion of the Rights Issue;

– 27 –

  • (ii) it will not, and will procure that the sub-underwriter and subscribers procured by them will not, together with any party acting in concert (within the meaning of the Takeovers Code) with it, hold 30.0% or more of the voting rights of the Company immediately upon completion of the Rights Issue; and

  • (iii) it shall and shall cause the sub-underwriter to procure subscribers independent of the Company and its connected persons to take up such number of Untaken Shares as necessary to ensure that the public float requirements under Rule 17.36 of the GEM Listing Rules are complied with.

  • (2) The percentage figures have been subject to rounding adjustments. Any discrepancies between totals and sums of amounts listed herein are due to rounding adjustments.

EQUITY FUND RAISING ACTIVITIES OF THE COMPANY FOR THE PAST TWELVE MONTHS

The Company has not conducted any equity fund raising activities in the past twelve months immediately preceding the date of this announcement.

EXPECTED TIMETABLE OF THE SHARE CONSOLIDATION AND THE RIGHTS ISSUE

The expected timetable for the Share Consolidation and the Rights Issue is set out below:

Event Time and Date

Expected date of despatch of the Circular and the notice of the EGM and proxy form . . . . . . . . . . . . . . . . . . . . Friday, 26 June 2020

Latest date and time for lodging transfer of the Shares in order to be qualified for attendance and voting at the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Wednesday, 8 July 2020 Closure of register of members of the Company for transfer of the Shares to determine the right to attend and vote at the EGM (both days inclusive) . . . . . . . Thursday, 9 July 2020 to Wednesday, 15 July 2020

– 28 –

Time and Date

Event

Latest time for return of proxy form of the EGM (not less than 48 hours prior to time of the EGM) . . . . . . . . . . . . . . . . . . 9:00 a.m. on Monday, 13 July 2020 Record date for attendance and voting at the EGM . . . . . . . . . Wednesday, 15 July 2020 Expected date and time of the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Wednesday, 15 July 2020 Announcement of results of the EGM . . . . . . . . . . . . . . . . . . . Wednesday, 15 July 2020 Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 16 July 2020

The following events are conditional on the fulfillment of the conditions for the implementation of the Share Consolidation and Rights Issue.

Effective date of the Share Consolidation . . . . . . . . . . . . . . . . . . . . Friday, 17 July 2020 Commencement of dealings in the Consolidated Shares . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 July 2020 Original counter for trading in the Existing Shares, in board lots of 2,000 Shares (in the form of existing share certificates) temporarily closes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 July 2020 Temporary counter for trading in the Consolidated Shares, in board lots of 200 Consolidated Shares (in the form of existing share certificates) opens . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 17 July 2020 First day for the free exchange of existing share certificates of the Shares into new share certificates of the Consolidated Shares commences . . . . . . . . . . . Friday, 17 July 2020 Last day of dealings in the Consolidated Shares on a cum-rights basis for the Rights Issue . . . . . . . . . . . . . . . . . . . . . Friday, 17 July 2020 First day of dealings in the Consolidated Shares on ex-rights basis for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . Monday, 20 July 2020

– 29 –

Time and Date

Event

Latest time for lodging transfer of the Consolidated Shares to qualify for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 21 July 2020 Register of members closes to determine the entitlements to the Rights Issue (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 22 July 2020 to Tuesday, 28 July 2020 Record Date for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 28 July 2020 Register of members re-opens . . . . . . . . . . . . . . . . . . . . . . . . . Wednesday, 29 July 2020 Despatch of the Prospectus Documents . . . . . . . . . . . . . . . . . . Wednesday, 29 July 2020 Original counter for trading in the Consolidated Shares in board lots of 2,000 Consolidated Shares (in the form of new share certificates) re-opens . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 31 July 2020 Parallel trading in the Consolidated Shares (in the form of both existing share certificates and new share certificates) commences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 31 July 2020 Designated broker starts to stand in the market to provide matching services for the sale and purchase of odd lots of the Consolidated Shares . . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 31 July 2020 First day and time of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . 9:00 a.m. on Friday, 31 July 2020 Latest time for splitting the PAL(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Tuesday, 4 August 2020 Last day and time of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 7 August 2020

– 30 –

Time and Date

Event

Latest time for acceptance of and payment for the Rights Shares and application for excess Rights Shares . . . . . . . . . . . 4:00 p.m. on Wednesday, 12 August 2020 Latest time for termination of the Underwriting Agreement and for the Rights Issue to become unconditional . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 13 August 2020 Announcement of the results of the Rights Issue . . . . . . . . . Wednesday, 19 August 2020 Despatch of share certificates for fully-paid Rights Shares . . .Thursday, 20 August 2020 Despatch of refund cheques for wholly or partially unsuccessful applications for excess Rights Shares or if the Rights Issue is terminated . . . . . . . . .Thursday, 20 August 2020 Designated broker ceases to stand in the market to provide matching services for the sale and purchase of odd lots of the Consolidated Shares . . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Thursday, 20 August 2020 Temporary counter for trading in board lots of 200 Consolidated Shares (in the form of existing share certificates) closes . . . . . . . . . . . . . . . . . . . 4:10 p.m. on Thursday, 20 August 2020 Parallel trading in the Consolidated Shares (in the form of new and existing share certificates) ends . . . . . . . . . . . . . . . 4:10 p.m. on Thursday, 20 August 2020 Commencement of dealings in the fully-paid Rights Shares . . . . . . . . . . . . . 9:00 a.m. on Friday, 21 August 2020 Latest time for free exchange of existing share certificates for new share certificates for the Consolidated Shares . . . . . . . . . . . . . . . 4:00 p.m. on Monday, 24 August 2020

All times and dates stated above refer to Hong Kong local times and dates. The expected timetable for the Share Consolidation and the Rights Issue set out above and all dates and deadlines specified in this announcement are indicative only and may be varied. Any changes to the expected timetable will be announced in a separate announcement by the Company as and when appropriate.

– 31 –

EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE LATEST TIME FOR ACCEPTANCE OF AND PAYMENT FOR THE RIGHTS SHARES AND FOR APPLICATION AND PAYMENT FOR EXCESS RIGHTS SHARES

The Latest Time for Acceptance of and payment for the Rights Shares and for application and payment for excess Rights Shares will not take place if:

  1. typhoon signal No. 8 (or above);

  2. “extreme conditions” caused by super typhoons as announced by the Government of the Hong Kong Special Administrative Region; or

  3. a “black” rainstorm warning

  4. (i) is/are in force in Hong Kong at any local time before 12:00 noon and no longer in force after 12:00 noon on the date of the Latest Time for Acceptance. Instead the Latest Time for Acceptance will be extended to 5:00 p.m. on the same Business Day; or

  5. (ii) is/are in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the date of the Latest Time for Acceptance. Instead the Latest Time for Acceptance will be rescheduled to 4:00 p.m. on the following Business Day which does not have either of those warnings in force in Hong Kong at any time between 9:00 a.m. and 4:00 p.m.

If the Latest Time for Acceptance does not take place on the currently scheduled date, the dates mentioned in the “EXPECTED TIMETABLE OF THE SHARE CONSOLIDATION AND THE RIGHTS ISSUE” above may be affected. Announcement will be made by the Company in such event.

GEM LISTING RULES IMPLICATIONS

Since the proposed Rights Issue will increase the issued share capital or the market capitalisation of the Company by more than 50%, in accordance with Rule 10.29(1) of the GEM Listing Rules, the proposed Rights Issue must be made conditional on approval by the Independent Shareholders in general meeting by a resolution on which any controlling Shareholders and their associates or, where there are no controlling Shareholders, the Directors (excluding independent non-executive Directors) and the chief executive of the Company and their respective associates shall abstain from voting in favour of the proposed Rights Issue and the transactions contemplated thereunder.

– 32 –

As at the date of this announcement, the Company has no controlling Shareholder as defined under the GEM Listing Rules and none of the Directors and the chief executive of the Company and their respective associates holds any Share. Accordingly, no Shareholder shall abstain from voting in favour of the proposed resolution approving the Rights Issue at the EGM and no Director shall abstain from voting in favour of the Rights Issue at the meeting of the Board.

GENERAL

A circular containing, among other things, (i) further details of the Share Consolidation and the Rights Issue, (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Rights Issue; (iii) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Rights Issue; and (iv) a notice convening the EGM, is expected to be despatched to the Shareholders on or before Friday, 26 June 2020.

The Company will despatch the Prospectus Documents containing, among other matters, details of the Rights Issue, to the Qualifying Shareholders. The Company will despatch the Prospectus (without the PAL(s) and EAF(s)) to the Non-Qualifying Shareholders for their information only.

WARNING OF THE RISKS OF DEALING IN THE EXISTING SHARES, THE CONSOLIDATED SHARES AND NIL-PAID RIGHTS SHARES

Shareholders and potential investors of the Company should note that the Rights Issue is conditional upon, among others, the Underwriting Agreement having become unconditional and the Underwriter not having terminated the Underwriting Agreement in accordance with the terms thereof (a summary of which is set out in the section headed “Termination of the Underwriting Agreement” in this announcement). Accordingly, the Rights Issue may or may not proceed.

Any Shareholder or other person dealing in the Existing Shares, the Consolidated Shares and/or the nil-paid Rights Shares up to the date on which all the conditions to which the Rights Issue are fulfilled (and the date on which the Underwriter’s right of termination of the Underwriting Agreement ceases) will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed.

Shareholders and potential investors are advised to exercise caution when dealing in the Existing Shares, the Consolidated Shares and/or the nil-paid Rights Shares. Any party who is in any doubt about his/her/its position or any action to be taken is recommended to consult his/her/its own professional adviser(s).

– 33 –

DEFINITIONS

In this announcement, the following expressions have the following meanings, unless the context requires otherwise:

“acting in concert” has the same meaning ascribed thereto under the Takeovers Code

  • “associate(s)” has the same meaning ascribed thereto under the GEM Listing Rules

  • “Board” the board of Directors

  • “Business Day(s)” a day on which licensed banks in Hong Kong are generally open for business, other than a Saturday or a Sunday or a day on which a black rainstorm warning or tropical cyclone warning signal number 8 or above is issued in Hong Kong at any time between 9:00 a.m. and 12:00 noon and is not cancelled at or before 12:00 noon

  • “CCASS” the Central Clearing and Settlement System established and operated by HKSCC

“Company” hmvod Limited, a company incorporated in the Cayman Islands with limited liability and the issued Shares of which are listed on GEM

  • “connected person(s)” has the meaning ascribed to it in the GEM Listing Rules

  • “Consolidated Share(s)” ordinary share(s) of HK$0.01 each in the share capital of the Company immediately after the Share Consolidation becoming effective

  • “Director(s)” the director(s) of the Company

“EAF(s)” the excess application form(s) for use by the Qualifying Shareholders who wish to apply for excess Rights Shares, in such usual form as may be agreed between the Company and the Underwriter

– 34 –

  • “EGM” the extraordinary general meeting of the Company to be convened to consider and, if thought fit, approve, among other things, the proposed Share Consolidation and the proposed Rights Issue

  • “Existing Share(s)/Share(s)” ordinary share(s) of HK$0.001 each in the share capital of the Company prior to the Share Consolidation having become effective

  • “GEM” GEM operated by the Stock Exchange

  • “GEM Listing Rules” the Rules Governing the Listing of Securities on GEM

  • “Group” the Company and its subsidiaries

  • “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong

  • “HKSCC” Hong Kong Securities Clearing Company Limited “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

  • “Independent Board the independent board committee of the Company comprising Committee” all the independent non-executive Directors to be formed for the purpose of giving a recommendation to Independent Shareholders as to whether the Rights Issue and the Underwriting Agreement are fair and reasonable and as to voting after taking into account the advice of the independent financial adviser

  • “Independent Shareholder(s)” any Shareholder(s) other than any controlling shareholders and their associates or, where there are no controlling shareholders, the Directors (excluding the independent nonexecutive Directors) and the chief executive of the Company and their respective associates

  • “Independent Third Party(ies)” third party(ies) independent of and not connected with the Company and any of its connected persons

  • “Last Trading Day”

  • 19 May 2020, being the last trading day of the Shares on the Stock Exchange before the release of this announcement

– 35 –

  • “Latest Time for Acceptance”

  • 4:00 p.m. on Wednesday, 12 August 2020 or other time or date as may be agreed in writing between the Company and the Underwriter, being the latest time for acceptance of, and payment for, the Rights Shares and application and payment for excess Rights Shares

  • “Latest Time for Termination”

  • 4:00 p.m. on Thursday, 13 August 2020 or such other time or date as the Underwriter may agree in writing with the Company

  • “Listing Committee”

  • has the meaning as defined in the GEM Listing Rules

  • “Non-Qualifying Shareholder(s)”

  • those Overseas Shareholder(s) whom the Directors, after making enquiries, consider it necessary, or expedient not to offer the Rights Issue to such Shareholder(s) on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place

  • “Overseas Shareholder(s)”

  • Shareholder(s) whose name(s) appear(s) on the register of members of the Company at the close of business on the Record Date and whose registered address(es) as shown on such register at that time is (are) in (a) place(s) outside Hong Kong

  • “PAL(s)”

  • the renounceable provisional allotment letter(s) to be issued to the Qualifying Shareholders in connection with the Rights Issue

  • “Prospectus” the prospectus to be despatched to the Shareholders containing details of the Rights Issue

  • “Prospectus Documents”

the Prospectus, the PAL and the EAF

  • “Prospectus Posting Date”

  • Wednesday, 29 July 2020 or such other date as may be agreed in writing between the Underwriter and the Company, being the date of despatch of the Prospectus Documents to the Qualifying Shareholders and the Prospectus for information only to the Non-Qualifying Shareholders

– 36 –

  • “Qualifying Shareholder(s)”

  • Shareholder(s), other than the Non-Qualifying Shareholders, whose name(s) appear(s) on the register of members of the Company on the Record Date

  • “Record Date”

  • Tuesday, 28 July 2020 or such other date as may be agreed between the Company and the Underwriter in writing for the determination of the entitlements under the Rights Issue

  • “Registrar”

the branch share registrar and transfer office of the Company in Hong Kong, being Union Registrars Limited at Suites 3301[–] 04, 33/F., Two Chinachem Exchange Square, 338 King’s Road, North Point, Hong Kong

  • “Rights Issue”

  • the proposed issue of the Rights Shares on the basis of five (5) Rights Shares for every one (1) Consolidated Share held on the Record Date at the Subscription Price on the terms and subject to the conditions in the Underwriting Agreement

  • “Rights Share(s)” 71,128,435 Consolidated Shares to be allotted and issued pursuant to the Rights Issue

  • “SFO” the Securities and Futures Ordinance (Cap 571 of the laws of Hong Kong)

  • “Shareholder(s)” holder(s) of issued Share(s) or the Consolidated Share(s) as the case may be

  • “Share Consolidation” the consolidation of every ten (10) issued and unissued Existing Shares of HK$0.001 each into one (1) Consolidated Share of HK$0.01 each

  • “Stock Exchange” the Stock Exchange of Hong Kong Limited

  • “Subscription Price” HK$0.85 per Rights Share

  • “Takeovers Code” the Hong Kong Code on Takeovers and Mergers

  • “Underwriter” Win Wind Securities Limited, a licensed corporation carrying out Type 1 (dealing in securities), Type 2 (dealing in futures contracts), Type 4 (advising on securities), and Type 9 (asset management) regulated activities under the SFO

– 37 –

“Underwriting Agreement”

the underwriting agreement dated 19 May 2020 entered into between the Company and the Underwriter in respect of the Rights Issue

“Underwritten Shares”

  • 71,128,435 Rights Shares underwritten by the Underwriter pursuant to the terms of the Underwriting Agreement

  • “Untaken Share(s)”

  • any of the Underwritten Shares which have not been taken up by the Qualifying Shareholders or transferees of nil-paid Rights Shares or applicants under excess applications by the Latest Time for Acceptance

“%”

per cent.

By order of the Board hmvod Limited Lau Kelly Executive Director

Hong Kong, 19 May 2020

As at the date of this announcement, the Board comprises the following Directors:

Executive Directors:

Mr. Lau Kelly (Chief Executive Officer)

  • Ms. Ho Chi Na

  • Mr. Ho Alvin Tzuen Chung

  • Ms. Sin Pui Ying

Independent non-executive Directors:

  • Mr. Ho Siu King, Stanley

  • Mr. Hau Chi Kit

  • Mr. Ma Stephen Tsz On

– 38 –

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Listed Company Information” page of the GEM website at www.hkgem.com for at least 7 days from the date of its posting and be posted on the website of the Company at www.hmvod.com.hk.

– 39 –

More from hmvod Limited

Regulatory Filings 2026
Jun 4
Regulatory Filings 2026
Jun 3
Regulatory Filings 2026
May 28
Regulatory Filings 2026
May 22
Board/Management Information 2026
May 22
Board/Management Information 2026
May 22
Regulatory Filings 2026
May 4
Regulatory Filings 2026
Apr 2
Regulatory Filings 2026
Apr 1
Regulatory Filings 2026
Mar 24
View all filings →