CHINA HK POWER SMART ENERGY GROUP LIMITED (Stock Code: 00931) announced on 5 March 2026 that it entered into a Loan Capitalisation Agreement with its chairman and executive director, Dr. Kan, who is also the controlling shareholder of the company. Under this agreement, HK$260.00 million of the shareholder’s loans owed to Dr. Kan will be converted into 722,222,222 new shares at HK$0.36 per share. The newly issued shares will account for approximately 9.71% of the current total issued shares and around 8.85% of the enlarged total after the completion of the transaction.

Dr. Kan currently holds around 50.59% of CHINA HK POWER’s issued share capital. Following completion of this proposed deal, his stake will increase to approximately 54.96%. The partial conversion of shareholder’s loans will reduce the company’s indebtedness and provide a broader capital base. As of the announcement date, the group’s total shareholder’s loans from Dr. Kan, including principal and accrued interest, have reached roughly HK$454.77 million.

CHINA HK POWER has previously executed two similar capitalisation transactions with Dr. Kan. The first, completed on 3 May 2024, converted HK$300.00 million of shareholder’s loans into 697,674,419 shares, and the second, completed on 2 July 2025, converted another HK$140.00 million into 717,948,718 shares. Including the latest plan, a total of HK$700.00 million in shareholder’s loans will have been converted into equity since 2024, at an overall average capitalisation price of about HK$0.327 per share.

The capitalisation price of HK$0.36 per share matches the 5 March 2026 closing price of the company’s shares. It also represents a discount of approximately 0.27% to the five-day average closing price of HK$0.361 immediately before 5 March 2026 and a discount of about 2.17% to the ten-day average closing price of HK$0.368 over the same period. It constitutes a premium of around 753.08% to the group’s unaudited consolidated net asset value per share of HK$0.0422 as of 30 September 2025.

Completion of the deal is subject to conditions including independent shareholders’ approval at an extraordinary general meeting (EGM) and the Stock Exchange listing of the new shares. Dr. Kan and his associates will abstain from voting on relevant resolutions. An Independent Board Committee of the company’s independent non-executive directors has been formed to advise independent shareholders on the terms of the agreement, and an independent financial adviser will be appointed upon committee approval.

According to recent disclosures, the company’s gearing ratio was 189.97% as of 30 September 2025, with interest-bearing borrowings of HK$616.08 million and cash and cash equivalents of HK$57.91 million at that date. The new capitalisation is intended to ease repayment pressure by reducing the need for additional debt or placing shares at a discount. The EGM circular, including further details, is expected to be dispatched on or before 26 March 2026. The transaction may or may not proceed, and investors are advised to exercise caution when dealing in the company’s shares.