CHINA HK POWER (00931) has announced that on March 5, 2026, the company, as the issuer, entered into a loan capitalization agreement with Dr. Jian Zhijian, as the subscriber. Under the agreement, the parties conditionally agreed that the subscriber will subscribe for a total of 722 million capitalization shares, which the company will allot and issue at a capitalization price of HK$0.36 per share. The total price payable by the subscriber for all capitalization shares will be settled upon completion through capitalization and by offsetting a repayment amount of HK$260 million. Assuming no change in the total number of issued shares from the date of this announcement until the allotment and issuance of the capitalization shares, the capitalization shares represent approximately 9.71% of the total issued shares as of the announcement date, and about 8.85% of the total issued shares as enlarged by the allotment and issuance of the capitalization shares. Given the group's financial condition, it is unable to repay the amount due to the subscriber using existing financial resources. Capitalizing the repayment amount enables the group to settle existing liabilities without utilizing current financial resources and avoids cash outflow. Furthermore, capitalizing the repayment amount reduces the company's debt level and expands its capital base. Although the allotment and issuance of capitalization shares will have a dilutive effect on existing independent shareholders, the directors consider this dilution reasonable after taking into account that the loan capitalization can alleviate the group's repayment and solvency pressure, and that the capitalization shares will be fully recognized as the company's equity upon allotment and issuance, thereby lowering the debt-to-asset ratio, expanding the capital base, and improving the group's net asset value position.