Landing International Development Ltd, which operates Korean integrated resort Jeju Shinhwa World, is proposing a capital reorganization in order to boost the company’s share price and improve its corporate image.
If approved, the reorganization would include a share consolidation under which every 50 issued existing shares of a par value of HK$0.01 each would be consolidated into one consolidated share of a par value of HK$0.50 each.
The reorganization would also include a capital reduction whereby the issued share capital of the company would be reduced by rounding down the number of consolidated shares in the issued share capital of the company to the nearest whole number by cancelling any fraction of a consolidated share. The paid-up capital of the company to the extent of HK$0.49 on each of the then issued consolidated shares would be cancelled so that the par value of each issued consolidated share would be reduced from HK$0.50 to HK$0.01.
The result of the reorganization would see the amount of issued share capital reduced from HK$1.47 billion to HK$29.35 million and the number of issues shares from 146.7 billion to 2.9 billion. The number of unissued shares would increase from 853.3 billion to 997.1 billion.
In a filing to the Hong Kong Stock Exchange, Landing said the primary reason behind the reorganization was to drive up the share price of the company.
“A very low share price, such as the current price of the existing shares, carries the undesirability of being viewed as a vehicle for speculation and this can have the effect of deterring potential investors, and in particular institutional investors,” Landing said.
“The board is aware that certain brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced shares or tend to discourage individual brokers from recommending low-priced shares to their customers.
“The board believes that the higher trading price of the new shares will also enhance the company’s corporate image and therefore attract a broader range of institutional and professional investors to invest in the new shares, broadening the shareholder base of the company.
“This has multiple benefits for the company and its existing shareholders. More financing opportunities are likely to become available for the company if the new shares become an acceptable investment option for institutional investors.
“This would allow the company to pursue additional profit-generating ventures to support the company’s long term development. Greater investment by institutional investors is also likely to reduce the volatility of and stabilize the price of shares of the company, as such investors tend to have longer investment horizons.”
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