MILAN STATION (01150): Proposed Increase in Authorized Share Capital

MILAN STATION (01150) announced that, as at the date of this announcement, the authorized share capital of the Company is HK$80 million (divided into 2 billion existing shares). In order to provide the Company with greater flexibility in fundraising, to cope with the future business expansion and growth of the Group, and to provide greater flexibility for future expansion of the Company's share capital, the Board proposes to increase the authorized share capital of the Company to HK$400 million (divided into 10 billion existing shares). The proposed increase in authorized share capital is subject to approval by the Shareholders by way of an ordinary resolution at the extraordinary general meeting. Conditional upon the increase in authorized share capital becoming effective, the Board proposes to implement a share consolidation on the basis that every 5 issued and unissued shares of HK$0.04 each be consolidated into 1 consolidated share of HK$0.20 each. The share consolidation is subject to, among other things, approval by the Shareholders at the extraordinary general meeting. Conditional upon the increase in authorized share capital becoming effective, the authorized share capital of the Company will be HK$400 million (divided into 10 billion existing shares of HK$0.04 each), and 1.057 billion existing shares are issued and fully paid or credited as fully paid. Assuming that no additional existing shares are issued or repurchased between the date of this announcement and the effective date of the share consolidation, upon the increase in authorized share capital and the share consolidation becoming effective, the authorized share capital of the Company will be HK$400 million (divided into 2 billion consolidated shares of HK$0.20 each), of which 211 million consolidated shares will be issued. As at the date of this announcement, the existing shares are traded on the Stock Exchange in board lots of 10,000 existing shares. It is proposed that, conditional upon the share consolidation becoming effective, the board lot size for trading on the Stock Exchange will be changed from 10,000 existing shares to 5,000 consolidated shares. Conditional upon the increase in authorized share capital and the share consolidation becoming effective, the Company proposes to conduct a rights issue on the basis of 1 rights share for every 1 consolidated share held on the record date at a subscription price of HK$0.36 per rights share, to raise gross proceeds of up to approximately HK$76.1 million (before deducting expenses) through the issue of up to 211 million rights shares. The rights issue is only available to qualifying shareholders and will not be offered to excluded shareholders (if any). The maximum estimated net proceeds from the rights issue (after deducting all relevant expenses) will be approximately HK$73.1 million (assuming the rights issue is fully subscribed and there is no change in the number of consolidated shares in issue on or before the record date). The net price per rights share (after deducting expenses relating to the rights issue) will be approximately HK$0.346 (assuming the rights issue is fully subscribed and there is no change in the number of shares in issue on or before the record date). Assuming the rights issue is fully subscribed and there is no change in the number of shares in issue on or before the record date, the Company intends to apply the net proceeds from the rights issue as follows: (i) approximately 54.8% for inventory procurement; (ii) approximately 7.1% for settlement of rental expenses of the Group's retail stores for the next 12 months; (iii) approximately 8.5% for payment of salaries of the Group's employees for the next 12 months; (iv) approximately 24.9% for repayment of bonds payable; and (v) approximately 4.7% for general working capital of the Group.