MOMENTUM FIN (01152) has entered into a settlement agreement with its creditors to capitalize on the outstanding debts owed to them. Trading will resume on January 9th.

MOMENTUM FIN (01152) announced that on October 18, 2024 (after trading hours), the company entered into a settlement agreement with creditors (Rosy Benefit, Nichoson and Mr. Cheng Lichung). The company conditionally agreed to capitalize the outstanding debt owed to the creditors, while the creditors conditionally agreed to subscribe and the company conditionally agreed to issue convertible bonds with a principal amount of HK$91.532 million to the creditors. The 45.77 billion shares of convertible shares under the convertible bonds will be issued and distributed in accordance with special authorization, which must be approved by independent shareholders at a special general meeting. Assuming no changes in the company's issued shares from the date of this announcement to completion, the convertible shares would represent approximately 466.06% of the company's existing issued shares as of the announcement date; and approximately 82.34% of the company's expanded issued shares after the distribution and issue of convertible shares. The price of each convertible share of HK$0.02 is discounted by approximately 73.33% compared to the closing market price of HK$0.0750 per share on the Stock Exchange at the date of the settlement agreement. During negotiations with creditors, the directors considered alternative financing methods to settle the outstanding debt. In terms of debt financing, given the lack of collateral for any potential debt financing arrangement, the directors believed it was not feasible for the group to obtain further debt financing from financial institutions to settle the outstanding debt. The current high interest rate environment in the debt market would also increase the group's interest burden. Regarding equity fundraising, due to the significant amount of outstanding debt, uncertain market sentiment, and unclear economic environment, it would be difficult to persuade underwriters to conduct a rights issue or placement at a reasonable cost, or to raise sufficient funds to settle the outstanding debt. Although the distribution and issuance of convertible shares will dilute the shareholding interests of existing shareholders, capitalizing the outstanding debt will relieve the company from the obligation to repay it; and once the convertible shares are issued and distributed, they will be fully recognized as equity of the company, expanding the capital base and strengthening the group's financial position accordingly. Compared to debt financing, debt restructuring will help the company avoid further financing costs. Therefore, among the possible alternative methods available to the company, the company considers debt restructuring to be an appropriate and cost-effective method. The directors (excluding independent non-executive directors, who will provide advice after considering the opinions of independent financial advisors) believe that it is in the company's and shareholders' overall interest to retain as much working capital as possible to meet the financial and liquidity needs for the operation and development of the group's business. Therefore, in order to avoid the risk of creditors filing a winding-up petition against the company, the company believes that debt restructuring provides a valuable opportunity for the group to settle the outstanding debt in full without using the company's existing financial resources or putting pressure on the group's cash flow situation. The company has applied to the Stock Exchange for the trading of shares to resume on the Stock Exchange from 9:00 am on January 9, 2025.