Hong Kong-listed Shin Hwa World Ltd has announced a capital reorganization and proposed right issue that it says will raise close to US$39 million to enhance the facilities and staffing at its Korean integrated resort, Jeju Shinhwa World.
According to details filed overnight, the capital reorganization will include a share consolidation whereby every 10 existing shares of HK$0.01 each will be consolidated into one HK$0.10 share. This will be followed by a capital reduction whereby the issued share capital of each shareholder will be rounded down to the nearest whole number by cancelling any fraction of a consolidated share, with the surplus added to the company’s accounts.
By doing so, Shin Hwa World said it expects to generate a surplus of around HK$45.6 million (US$5.8 million).
Subject to the capital reorganization and share consolidation, the company said it plans to implement a rights Issue on the basis of two Rights Shares for every one Adjusted Share held on the record date, with the goal of raising up to HK$263.7 million (US$33.7 million) before expenses or HK$258.6 million (US$33.0 million) after expenses.
This, it said, “represents an opportunity to raise additional funding to strengthen the Group’s financial position by relieving the financial burden and provide working capital to the Group to meet any financial obligations of the Group without additional interest burden.”
On the use of proceeds generated, Shin Hwa World explained that HK$100 million (US$12.8 million) is intended for “maintenance, renovation and upgrade of facilities in Jeju Shinhwa World, including but not limited to a water supply construction for the development of Jeju Shinhwa World.”
Another HK$73 million (US$9.3 million) is intended for the “development of the Resort Business and Gaming Business of the Group such as service enhancement, supply chain management, human resources development as well as sales and marketing activities,” while another HK$50 million (US$6.4 million) is for interest expense and the remaining HK$35.6 million (US$4.5 million) for the general working capital of the company.
Shin Hwa World recently reported a US$67 million loss for 2023 due to what it says was pressure on the room price and occupancy rate of its hotels due to intense competition and domestic customers travelling abroad after the easing of global travel restrictions.
RelatedPosts
