EPI (Holdings) Limited Announces Major Rights Issue: Key Details for Investors

EPI (Holdings) Limited has announced a significant rights issue, offering shareholders the opportunity to participate in a capital raising exercise that could substantially impact the company’s share capital and future prospects. Here’s a comprehensive breakdown of the key points, potential price-sensitive information, and what shareholders need to know.

Key Highlights of the Rights Issue

• Rights Issue Basis: Shareholders will be entitled to subscribe for two (2) Rights Shares for every one (1) Share held on the Record Date.
• Subscription Price: HK\$0.16 per Rights Share, representing a significant discount to the recent market price and net asset value per share.
• Number of Rights Shares Offered: Up to 1,238,487,808 Rights Shares, assuming no changes to issued shares prior to the Record Date.
• Total Shares After Completion: Upon successful completion, the total issued shares will rise to 1,857,731,712, marking a 200% increase in share capital and a dilution effect of approximately 14.38% for existing shareholders.
• Gross Proceeds: Up to approximately HK\$198.2 million before expenses.
• Underwriter: GLAM Capital Limited, acting on a best-effort and non-fully underwritten basis. If the Rights Issue is undersubscribed, the size of the issue will be reduced accordingly.
• Timetable:
  • Despatch of Prospectus: 19 March 2026
  • Dealings in nil-paid Rights Shares: 23 March 2026 – 30 March 2026
  • Latest time for acceptance and payment: 2 April 2026
  • Announcement of results: 14 April 2026
  • Commencement of dealings in fully-paid Rights Shares: 16 April 2026

Important Shareholder Information

• Potential Dilution: The rights issue will dilute existing shareholdings by about 14.38%. The dilution is significant, but compliant with HKEX Rule 7.27B.
• Discounted Pricing: The subscription price (HK\$0.16) is set at a substantial discount compared to both the closing price on the Latest Practicable Date (HK\$0.238) and the net asset value per share (HK\$0.692 as of 30 June 2025). This could incentivize participation but may also weigh on the share price if investors perceive the discount as reflecting underlying risks or weak fundamentals.
• Scaling-down Mechanism: To avoid triggering a mandatory general offer (MGO) under the Takeovers Code, applications for rights shares (including excess applications) may be scaled down. Excess applications are allocated on a fair and equitable basis, with controlling shareholders’ applications subject to strict limits.
• Best-effort Underwriting: The Rights Issue is not fully underwritten. If the issue is not fully subscribed, remaining shares will not be issued, and the capital raised will be less than the maximum amount.
• Eligibility: Only Qualifying Shareholders (those not excluded by legal or regulatory restrictions) will be able to participate. Shareholders with addresses in New Zealand are excluded.
• Odd Lots Matching Service: To assist with odd lots resulting from the Rights Issue, a designated broker will offer matching services from 16 April to 12 May 2026, but successful matching is not guaranteed.
• Use of Proceeds: The funds raised will be used to:
  • Develop petroleum exploration and production business in Canada (drilling new wells, production facilities).
  • Expand the money lending business, particularly in New Zealand.
  • Potential acquisitions or investments.
  • General working capital (wages, salaries, other expenses).

  If the Rights Issue is undersubscribed, proceeds will be used in the above order.

• Financial Health: The company states it has sufficient working capital for at least the next 12 months, factoring in the proceeds from the Rights Issue.
• Termination Risk: The Underwriter has the right to terminate the agreement under certain force majeure or adverse events, including major market disruptions, material changes to the company, or legal/regulatory issues. If terminated, the Rights Issue will not proceed.
• Trading Risks: Shareholders and investors are cautioned that the Rights Issue is conditional and may not proceed if the underwriting agreement is terminated or conditions are not met. Dealing in nil-paid Rights Shares carries risk; if the issue fails, those rights will become worthless.

Strategic Rationale and Potential Share Price Impact

The Rights Issue is designed to raise substantial capital to strengthen EPI’s financial position and support core growth areas—petroleum exploration and production, as well as money lending. The Board has reviewed alternative fundraising options (debt, placing, open offer) and concluded that the Rights Issue is preferable as it allows shareholders to participate directly and avoids additional debt burden.

The discounted subscription price, large increase in share capital, and the best-effort underwriting model are all potentially price-sensitive. The dilution effect and uncertainty around full subscription may pressure the share price, especially if not all new shares are taken up. However, the strategic investment in core business areas and expansion into New Zealand’s lending market could be positive if executed successfully.

Financial and Trading Prospects

• Recent Performance: For the six months ended 30 June 2025, EPI saw revenue grow by 4% to HK\$38.16 million and a significant improvement in profit, largely due to currency gains and expansion in New Zealand money lending.
• Business Outlook: EPI plans further drilling in Canada, increased lending activities in New Zealand, and potential acquisitions, aiming for sustainable growth and diversified income.
• Risks: The company acknowledges macroeconomic uncertainties, including oil price volatility, geopolitical tensions, and regulatory changes, which could affect earnings and investor sentiment.

Additional Shareholder Considerations

• Taxation: Shareholders should consult professional advisors regarding the tax implications of participating in the Rights Issue or selling their rights, particularly for non-Hong Kong residents.
• Legal Restrictions: The Rights Issue does not constitute an offer in jurisdictions where it would be unlawful. Distribution of rights or prospectus in such jurisdictions is strictly prohibited.
• No Recent Fundraising: The company has not conducted any equity fundraising or rights issue in the preceding 12 months.

Conclusion: Price-Sensitive Takeaways

• The Rights Issue will significantly increase EPI’s share capital and dilute existing holdings.
• The discounted offering price may impact market perception and trading prices.
• Best-effort underwriting means there is uncertainty on capital raised and dilution.
• Strategic use of proceeds could support long-term growth, but execution risks remain.
• Termination and trading risks are substantial; shareholders should exercise caution.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should carefully review the full prospectus and consult professional advisors before making any investment decisions. The information is based on the prospectus dated 19 March 2026 and is subject to change. The author assumes no responsibility for investment outcomes or actions taken based on this article.

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