CHINA CBS INTL (00989) signed a restructuring framework agreement with Guangze Group in Hong Kong, triggering a comprehensive cash tender offer.

China CBS International (00989) and the offeror Guangze Group (Hong Kong) Limited jointly announced that on July 15, 2026, Guangze Group Hong Kong entered into a restructuring framework agreement with the company. Pursuant to this, the company will implement a proposed restructuring, which involves (including) (i) the subscription matter; and (ii) the scheme. Subject to the terms and conditions of the subscription agreement and depending on the withdrawal of the total amount of HK$39 million under the financing agreement, Guangze Group Hong Kong is required to subscribe for a total of 260 million subscription shares at a total subscription price of HK$39 million, at a price of HK$0.15 per subscription share. This amount must be paid in full by utilizing all amounts advanced by Guangze Group Hong Kong in accordance with the financing agreement and to be advanced by the company, with the subscription price being allocated in full to pay up the capital for the subscription shares. Based on the company's books, records, and information available and pending any determination and/or award of the claims under the approved scheme, the total amount owed by the company to Guangze Group Hong Kong and Jia Translate is approximately HK$404 million. Under the terms of the restructuring framework agreement, the company proposes the scheme between the company and the scheme creditors. Upon the effectiveness of the scheme, all claims of the scheme creditors will be fully released and waived. As a return, scheme creditors holding approved scheme claims will have the right to receive scheme shares issued and distributed by the company to the scheme company, which will be held in trust for the benefit of the scheme creditors holding approved scheme claims and will only be distributed to the relevant scheme creditors after the determination and/or award of their approved scheme claims and after the offer period ends. Under the scheme, the scheme company will receive approximately 4.742 billion scheme shares, which will be held in trust for the benefit of the scheme creditors until the determination and/or award of their scheme claims and until the irrevocable commitment offer ends. The price for each scheme share is HK$0.15, a discount of approximately 79.17% compared to the closing market price of HK$0.72 per share on the last trading day on the Stock Exchange. Assuming the total amount of HK$39 million under the financing agreement has been withdrawn and the number of issued shares has remained unchanged (exclusive of the subscription shares and scheme shares issued and distributed), the shareholding percentages of Guangze Group Hong Kong and Jia Translate will increase to approximately 2.223 billion shares and 818 million shares, respectively, representing approximately 41.46% and 15.26% of the enlarged issued share capital. As a result, the total shareholding of the concert party group will increase from approximately 109 million shares, representing approximately 30.20% of the issued shares on the date of the joint announcement, to approximately 3.06 billion shares, representing approximately 57.07% of the enlarged issued share capital. This will trigger a mandatory general cash offer to acquire the remaining approximately 251 million public shares at HK$0.15 per share, involving a total of HK$37.7 million. Considering the company's severe shortage of working capital and significant financial pressure, its ability to repay all maturing debts has been severely impaired, and the company lacks sufficient financial resources to settle all its maturing liabilities. Given that Guangze Group Hong Kong is willing to provide funds to the group to reduce the company's debt and support the group's business operations, the board believes that entering into the restructuring framework agreement and the subscription agreement will facilitate the group's debt restructuring and benefit the group's debt restructuring plan. On the other hand, the company believes that the proposed restructuring is a strategic and practical solution to orderly address its outstanding debts, allowing all debts and liabilities owed to creditors to be released and settled under the terms of the scheme. Otherwise, the company may face an unsustainable financial situation and be at risk of insolvency, with shareholders and scheme creditors potentially facing lower or insignificant returns.