CHEVALIER INT'L (00025) announced that on February 13, 2026, its wholly-owned subsidiary, System Express Limited, intends to acquire a 40% equity stake in NC1 Sandhill Limited and the target loan from Mitsubishi Corporation (Hong Kong) Limited for a total consideration of HK$203.8 million. Prior to the completion of the transaction, the target company was an indirect non-wholly-owned subsidiary of CHEVALIER INT'L. Upon completion, the target company will become an indirect wholly-owned subsidiary of the Group.

To secure sufficient funding for the loan, the target group entered into a loan agreement with the seller. Under the terms of this agreement, the target loan carries an annual interest rate of 10%. As of the date of the sale and purchase agreement, accrued interest amounted to approximately HK$122 million.

Upon completion of the acquisition, the Group will realize immediate savings of about HK$122 million in interest expenses. This saving is calculated based on the total principal and accrued interest of HK$291 million, minus the present value of the deferred loan consideration of HK$169 million. Furthermore, the Group will avoid any future interest payments to the seller under the loan agreement.

The seller decided to realize its investment earlier than initially anticipated following an assessment of the target group's business. This assessment particularly considered the time required for the target group's consulting business, which operates the facility building as an elderly home facility, to achieve profitability. In contrast, the Group maintains a focus on the long-term development prospects of the target group.

Although the target group is currently operating at a loss, the directors remain confident in its long-term profitability. This confidence is based on the continuously aging population in Hong Kong, which is expected to drive sustained growth in demand for local elderly care facilities. The facility building occupies a prime location with high-quality conditions. Having commenced operations only in November 2024, the target group has the potential to increase the occupancy rate of the facility building, thereby boosting operational revenue and achieving long-term profitability. Consequently, the directors believe that the acquisition presents a valuable opportunity for the Group to gain full control of the target group, especially given the seller's intention to realize its investment early.