China Changbaishan International Holdings Limited (“China CBS Intl”) signed a Restructuring Framework Agreement with Ground Group (Hong Kong) Co., Limited (“Ground Group HK”) after trading hours on 15 July 2026, setting in motion a multi-step balance-sheet overhaul that will expand the company’s share base more than fourteen-fold and hand control to the investor group.
Key terms of the restructuring
1. Subscription • Ground Group HK will capitalise HK$39.00 million previously advanced under a funding agreement into 260.00 million new shares at HK$0.15 each. • The new shares represent 4.85 % of the enlarged share capital and will be issued under a specific mandate subject to independent shareholders’ approval.
2. Scheme of Arrangement • A court-sanctioned scheme will extinguish up to HK$711.37 million of admitted creditor claims. • Creditors will receive 4.74 billion scheme shares, also priced at HK$0.15, to be held in trust until after the close of the takeover offer. • Upon effectiveness, all scheme claims will be fully discharged.
Capital structure after implementation
• Issued shares will rise from 360.18 million to 5.36 billion. • The concert party led by Ground Group HK will increase its stake from 30.20 % to 57.07 %. • Public float could fall below 25 %; Ground Group HK undertakes to restore compliance via share placings if required.
Mandatory unconditional cash offer
The post-restructuring stake increase triggers Rule 26 of the Takeovers Code. Ground Group HK, through DL Securities, will offer HK$0.15 in cash for each of the remaining 251.41 million shares not held by the concert party or locked-up scheme shares. The maximum consideration is about HK$37.70 million, financed by a secured facility of up to HK$40.00 million from DL Securities.
Connected transactions and special deal
• Both the subscription and the issue of 2.69 billion scheme shares to connected creditors Ground Group HK and Ka Yik constitute connected transactions requiring independent shareholders’ approval. • Separate settlement terms for shareholder-creditors Ka Yik, Mr Jiang Jinbo, Mr Lin Huipeng and Ms Wang Ting Ting constitute a special deal under Rule 25; consent from the Securities and Futures Commission’s Executive is being sought.
Financial background
• The group reported a RMB122.20 million profit for FY 2026, driven by one-off gains, but remained in a net liabilities position of RMB489.49 million with cash of only RMB4.20 million. • Management views the restructuring as essential to avert insolvency and stabilise operations.
Governance and timetable
• An Independent Board Committee and a Takeovers Code Independent Board Committee have been formed; Jun Hui International is appointed as independent financial adviser. • A circular is slated for dispatch on or before 5 August 2026, with a special general meeting to vote on the specific mandate, scheme, subscription and special deal. • The takeover composite document will be issued after conditions precedent are met; an extension application will be filed with the SFC if needed.
Caution
Completion depends on court approval, shareholder votes, regulatory consents and other conditions. Shareholders and investors are advised to exercise caution when dealing in China CBS Intl shares until further announcements are made.