CHINASOUTHCITY (01668) implements a comprehensive debt restructuring plan through debt repayment arrangements.

CHINASOUTHCITY (01668) announces that since the announcement made on December 18, 2025, the company has made progress in discussions with overseas creditors and other stakeholders. The discussions are aimed at developing a feasible overall solution to address the companys inability to repay its overseas debts; establishing a sustainable capital structure and stable operating environment to support the groups business recovery in the medium to long term; and meeting the requirements set out by the Stock Exchange of Hong Kong for resuming the trading of the company's shares. The proposed preliminary terms aim to provide a fair and equitable solution, maximizing the recovery of the company's creditors' claims while preserving the group's ability to continue operating. Specifically, the proposed preliminary terms will allow creditors claims to retain any existing credit support post-restructuring; for debt that will be converted to equity, creditors will benefit from short-term liquidity and potential equity appreciation; and through negotiated cash collection arrangements, overseas creditors will benefit from the proceeds of the group's sale of certain domestic projects. In the event that the overall debt restructuring is not implemented in accordance with the proposed preliminary terms, or not implemented at all, there is a significant risk that the liquidator may need to consider other recourse measures on a piecemeal basis for the group's assets. This could lead to instability in the group's domestic business and significant uncertainty regarding the timing and outcome of the overseas creditors' recovery. According to the proposed preliminary terms, the scope of the overall debt restructuring will cover the company's debt issued or guaranteed, other debts and liabilities of the company, and claims for dividends declared but not yet paid. The company intends to implement the overall debt restructuring through debt repayment arrangements pursuant to Part 13 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong). If deemed necessary or appropriate by the company and its advisors, the company may also seek to implement all or part of the overall debt restructuring through simultaneous or similar proceedings or arrangements in other relevant jurisdictions. If the arrangement is approved by the Hong Kong court, the liquidator intends to apply to the court for a permanent stay of the winding-up order made against the company on August 11, 2025. If the winding-up order is permanently stayed, the company will no longer be in liquidation and can resume its ability to operate continuously. The company plans to implement a management incentive plan (the incentive plan) to retain key management personnel who play a crucial role in the group's continuous operation and incentivize them to manage the company in a way that maximizes performance after the group's restructuring. Under the incentive plan, subject to meeting certain conditions linked to the company's performance, relevant personnel may be granted up to 10% of the company's ordinary shares (calculated on a fully diluted basis and taking into account the proposed issuance of new ordinary shares to resolve a portion of the creditors' principal and interest). The implementation of the incentive plan must comply with listing rules and other applicable regulatory requirements and must be approved by the shareholders.