FANTASIA (01777) and Splendid Fortune have entered into a restructuring agreement to sell 409 million shares of COLOUR LIFE for approximately $452.84 million.

FANTASIA (01777) announced that the company, TFISF, and the buyer Splendid Fortune Enterprise Limited entered into a restructuring agreement on January 2, 2026. Under this agreement, the parties conditionally agreed to a series of parallel transactions involving the following: the buyer will purchase sales shares of COLOUR LIFE (a subsidiary of the company) at a price of HK$0.087 per share (4.09 billion shares of COLOUR LIFE, representing approximately 21.97% of the issued shares of COLOUR LIFE as of the date of this announcement). TFISF will utilize the proceeds (i.e. the funds obtained from the sale of sales shares); transfer TFISF shares (representing approximately 10.0% of the issued shares of COLOUR LIFE as of the date of this announcement) to a designated entity of TFISF as effective collateral for the alleged guarantee; after deducting the alleged debt cost and the agreed share value, reduce the total debt payable to TFISF to a net amount. The company will retain company shares (representing approximately 9.98% of the issued shares of COLOUR LIFE as of the date of this announcement), which will not be limited by the alleged guarantee or any other claims, and has been released and exempted; and (subject to the fulfillment or waiver of the restructuring conditions by the deadline day or prior to the deadline day) a debt replacement and assumption of related new debt will be made by a subsidiary of the company, Sky Ease, without recourse against the company and other group member companies (excluding companies limited by a pledge under the existing guarantees). In terms of the restructuring agreement, the value of each share of COLOUR LIFE is HK$0.087, representing a discount of approximately 48.82% compared to the closing price of COLOUR LIFE shares reported on the Stock Exchange on the date of the restructuring agreement of HK$0.17. The total consideration for the sales shares calculated at HK$0.087 per share is US$4.5284 million. Subject to final review, the group is expected to incur a net loss of approximately RMB 1.409 billion, which is based on the consideration for the sale of sales shares (representing approximately 21.97% of the issued shares of COLOUR LIFE as of the date of this announcement), the transfer of TFISF shares to a designated entity of TFISF as effective collateral (representing approximately 10.0% of the issued shares of COLOUR LIFE as of the date of this announcement), and the calculation of COLOUR LIFE's asset net value. The proceeds from the sale of sales shares (i.e. consideration) will be used by TFISF to reduce the company's risk exposure to TFISF. The company will not receive any cash payments for other transactions proposed under the restructuring agreement (including but not limited to the transfer of TFISF shares to a designated entity of TFISF, debt replacement, and assumption of new debt). After the sale of sales shares, COLOUR LIFE will no longer be a subsidiary of the company. Following the sale of sales shares and the transfer of TFISF shares to a designated entity of TFISF, as of the date of this announcement, the company will retain 186 million shares of COLOUR LIFE (not subject to alleged guarantees), representing approximately 9.98% of the total issued shares of COLOUR LIFE. Before signing the restructuring agreement, the board of directors considered various factors, including efforts made by the parties to resolve the dispute so far; legal advice provided by the company's legal counsel on the potential outcomes of the dispute; lack of interest in COLOUR LIFE shares in the tender process; current market conditions and atmosphere in the Chinese real estate industry; the company's plan to implement a proposed debt restructuring; and the potential significant adverse effects on the company if the proposed debt restructuring is not carried out as scheduled, thereby affecting shareholder interests.