CHINA HK POWER (00931) plans to issue 722 million shares of capitalization shares.

CHINA HK POWER (00931) has announced that on March 5, 2026, the company (as the issuer) entered into a loan capitalization agreement with Dr. Jian Zhijian (as the subscriber). According to this agreement, the parties agreed that the subscriber will subscribe for a total of 7.22 billion capitalization shares at a capitalization price of HK$0.36 per share, and the company will issue these shares. The subscriber will pay for all the capitalization shares through capitalization and offsetting, totaling HK$2.60 billion. Assuming that the total number of issued shares has not changed from the date of this announcement to the period of issuing the capitalization shares, the capitalization shares represent approximately 9.71% of the total number of issued shares on the date of this announcement, and approximately 8.85% of the total number of issued shares after the issuance of the capitalization shares. Due to the financial condition of the group, the group is unable to repay the amount owed to the subscriber with existing financial resources. The repayment amount will be used to strengthen the capital so that the group can repay its existing liabilities without utilizing existing financial resources and avoid cash outflows. In addition, using the repayment amount to strengthen capital will reduce the company's debt level and expand its capital base. Despite the dilutive effect on existing shareholders, the capitalization of the loan amount is considered to alleviate the repayment pressure of the group and the capitalization shares will be recognized as equity, thus lowering the debt-to-equity ratio, expanding the capital base, and improving the net asset value of the group. The directors believe that the dilutive effect of issuing capitalization shares is reasonable in this case.