CA Cultural Technology Group Limited and Kyosei-Bank Co., Ltd. Announce Major Restructuring Milestones: All Key Resolutions Passed at EGM
Key Highlights for Investors
- All key resolutions related to capital reorganization, restructuring, whitewash waiver, and special deals were passed at the EGM held on 27 May 2026.
- Conditional grant of Whitewash Waiver and consent to Special Deals by the Securities and Futures Commission (“Executive”).
- Significant changes to shareholding structure, including a potential new controlling shareholder and substantial dilution for existing shareholders.
- Trading suspension remains in effect pending further announcements and compliance with public float requirements.
Detailed Developments and Price-Sensitive Issues
1. Poll Results of the Extraordinary General Meeting (EGM)
The EGM took place on 27 May 2026, with a poll conducted for all resolutions. Out of 1,182,042,000 issued shares, 711,155,000 shares were entitled to vote after required abstentions. All key resolutions were passed with 100% of votes in favor and 0% against, both for ordinary and special resolutions. These included:
- Share Consolidation (including treatment of fractions)
- Capital Reduction
- Increase in Authorized Share Capital
- Approval and ratification of the Share Subscription Agreement and Convertible Bonds (CB) Subscription Agreement
- Approval and ratification of the Creditors’ Scheme, including HK\$160 million cash payment and new shares to SchemeCo
- Approval of Special Deals under Rule 25 of the Takeovers Code for SD Creditors and Mr. Lam
- Grant of Whitewash Waiver
Notably, major shareholders and parties involved in the restructuring and special deals abstained from voting as required, ensuring the independence of the vote.
2. Whitewash Waiver and Special Deals
The Executive has conditionally granted the Whitewash Waiver (allows the Investor and concert parties to acquire control without triggering a mandatory general offer) and consented to the special deals, subject to approval by independent shareholders and compliance with relevant conditions. This paves the way for the Investor, Kyosei-Bank Co., Ltd., to become the new controlling shareholder, dramatically altering the ownership structure.
3. Changes to Shareholding Structure
The restructuring will significantly alter the Company’s shareholding:
- After completion and full conversion of Convertible Bonds: The Investor and concert parties could own up to 89.04% of the enlarged share capital.
- Dilution for Existing Shareholders: Existing public shareholders will see their combined stake reduced to as low as 6.65%.
- Bright Rise Enterprises Limited and Fortress Strength Limited (linked to current chairman and family) have undertaken to dispose of their stakes before new shares are issued, to ensure the company meets the 25% minimum public float requirement.
- If these disposals and float conditions are not met, the completion of the restructuring and share issues cannot proceed.
The restructuring involves share consolidation (10:1), capital reduction, and the issuance of new shares and convertible bonds to the Investor and SchemeCo. The final structure ensures compliance with public float requirements but will result in substantial dilution and potential change of control.
4. Continued Suspension of Trading
Trading in the shares remains suspended since 21 November 2024. The restructuring and share issue are subject to approval from the Stock Exchange, including listing of new shares and compliance with public float requirements. If these conditions are not met, the restructuring will not proceed and trading will remain suspended.
- Shareholders and potential investors should note that the restructuring may or may not proceed. This uncertainty and the potential dilution and change of control are highly price sensitive.
- The Stock Exchange will not allow the listing of new shares if public float requirements are breached.
Key Takeaways for Shareholders
- All restructuring proposals, including capital reorganization, credit schemes, and special deals, have been approved by independent shareholders.
- The Company faces a significant change in ownership, with the Investor poised to become the new controlling shareholder.
- Current shareholders will face substantial dilution and should be aware of the potential for further volatility or price movements when trading resumes.
- Trading will remain suspended until the Stock Exchange grants approval and all restructuring conditions are met.
- There is still a risk that the restructuring may not proceed if these conditions are not satisfied.
Directors’ Statements
The Directors of both CA Cultural Technology Group Limited and Kyosei-Bank Co., Ltd. have accepted full responsibility for the accuracy of the information contained in the announcement.
Disclaimer: This article is for information purposes only and does not constitute investment advice. Investors should consult their professional advisers before making any investment decisions. The Company’s shares are currently suspended from trading, and there is significant uncertainty regarding the completion of the restructuring and the future value of the shares.
