Guanze Medical Information Industry (Holding) Co., Ltd. – Clarification Announcement on Public Float and Listing Status

Key Developments and Investor Implications

Guanze Medical Information Industry (Holding) Co., Ltd. (the “Company”, Stock Code: 2427) and FUNDE (HONG KONG) INVESTMENT HOLDINGS CO., LIMITED (the “Offeror”) have jointly issued a clarification announcement regarding the company’s public float and the maintenance of its listing status following the close of a takeover offer.

Key Points from the Announcement

• Clarification Due to Rule 3.5 Announcement: The Company and Offeror are replacing the previously published paragraphs on the public float and listing status with updated information, addressing concerns about the company’s ability to maintain its listing on the Hong Kong Stock Exchange after the offer closes.
• Public Float and Listing Rules: Pursuant to the Hong Kong Listing Rules, the Stock Exchange has highlighted two major risks upon the close of the Offer:
  • If a false or disorderly market exists or may exist in the trading of shares, the Stock Exchange may exercise its discretion to suspend dealings in the shares.
  • If the Company suffers a Significant Public Float Shortfall (as defined in Rule 13.32F), a designated marker will be added to the stock, and the Stock Exchange will cancel the listing if the Company does not restore compliance with Rule 13.32B within 18 months.
• Potential Suspension of Trading: If, upon closing the Offer, there is insufficient public float, trading in the Company’s shares may be suspended until the public float requirement is satisfied again.
• Application for Waiver: The Company will apply for a temporary waiver from the strict compliance with the requirement that at least 25% of its issued share capital must be held by the public if this threshold is not met at the close of the Offer.
• Restoration of Public Float: The Offeror intends to take steps to restore public float, which may include selling or placing down sufficient shares to independent third parties not acting in concert with the Offeror. However, as of the date of the announcement, no specific arrangements have been made.
• Commitment to Listing: The Offeror has expressed its intention for the Company to remain listed on the Stock Exchange post-offer. Both the sole director of the Offeror and the Company’s Directors have undertaken to take all necessary actions to ensure compliance with the public float requirement as soon as possible.
• Further Announcements: The Company will issue additional announcements regarding the restoration of public float as and when appropriate.
• Responsibility Statement: The directors of both the Offeror and the Company have accepted full responsibility for the accuracy of the information in the announcement, confirming that, to the best of their knowledge, all opinions and facts have been carefully considered.

Price Sensitive and Shareholder-Relevant Information

• Risk of Trading Suspension: There is a material risk that shares may be suspended from trading if the public float falls below the required threshold, potentially impacting liquidity and valuation.
• Risk of Delisting: If the public float is not restored within 18 months after a Significant Public Float Shortfall, the Stock Exchange will cancel the listing, which could severely affect shareholder value and marketability of shares.
• Uncertainty on Restorative Steps: While the Offeror has indicated intentions to restore public float, no concrete arrangements have been confirmed, introducing uncertainty regarding the timing and certainty of compliance.
• Potential Share Placement: Steps to restore the public float may involve selling shares into the market, which could exert downward pressure on the share price in the short term.
• Continued Listing Commitment: The stated commitment to maintain the listing and restore public float may provide some reassurance to investors, but execution risk remains.

Board and Management Details

• Offeror’s Leadership: Mr. Zhang, David Jia-yuan is the sole director of the Offeror.
• Ultimate Parent Company: Mr. Cheung is the sole director of Shenzhen City Junde Investment Co., Ltd., the ultimate parent company of the Offeror.
• Company Board: The Company’s board comprises Mr. Meng Xianzhen (Chairman), Mr. Guo Zhenyu (Executive Director), Ms. Meng Cathy (Non-executive Director), and three independent non-executive directors: Dr. Zhao Bin, Dr. Chang Shiwang, and Dr. Wong Man Hin Raymond.

Investor Takeaways

Investors should closely monitor further announcements from the Company regarding the restoration of public float. The risk of trading suspension or delisting is a material concern and could significantly impact share price and future liquidity. The lack of concrete arrangements to restore public float increases uncertainty, although the stated intention to maintain the listing offers some reassurance. Shareholders should be alert to any developments that may affect the Company’s compliance with listing rules and the marketability of their shares.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any securities. Investors should conduct their own due diligence and consult with professional advisers before making investment decisions. The information is based on public disclosures as of the date of the announcement and may be subject to change.

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