On the evening of September 16, 2026, a much-anticipated announcement from ST Huayi brought a preliminary conclusion to the nearly six-month-long selection process for its pre-restructuring investor, as the company formally confirmed China Media Capital (CMC) as the restructuring industry investor. The company, its interim manager, and CMC officially signed the Restructuring Investment Agreement and supplementary agreements, paving the way for a new chapter in the troubled studio's saga.

Under the terms of the agreement, CMC will acquire approximately 896 million new shares at a price of 0.9333 yuan per share, for a total investment of roughly 836 million yuan. This stake will represent about 17% of the post-restructuring total share capital, making CMC the controlling shareholder and securing management control. As a result, Li Ruigang, the influential media executive known as "China's Murdoch," is set to become the new actual controller of the former film industry leader.

Capital Reserve Conversion: Original Shareholders Left Empty-Handed

The restructuring will be implemented through a capital reserve conversion to increase share capital. ST Huayi, with its current total share capital of approximately 2.775 billion shares as the base, will convert shares at a ratio of 9 new shares for every 10 existing shares, adding roughly 2.497 billion new shares and expanding total capital to about 5.272 billion shares. None of the converted shares will be distributed to original shareholders.

The allocation structure for the new shares is as follows: the industry investor CMC will receive approximately 896 million shares, accounting for about 17%; co-investing financial investors will take around 1.128 billion shares, representing roughly 21.4%; and the remaining converted shares will be used partially or entirely to settle debts under the bankruptcy restructuring. Notably, CMC's acquisition price of 0.9333 yuan per share represents a 50% discount to the company's average trading price of 1.8666 yuan per share over the 20 trading days preceding the agreement.

Regarding lock-up periods, CMC cannot transfer its shares for 36 months after acquisition, while financial investors face a 12-month lock-up. All parties are aiming to complete the restructuring plan implementation by December 31, 2026. The injected funds will first cover bankruptcy expenses, common benefit debts, and cash-settled claims, with remaining funds retained by the listed company for operational turnover, industrial upgrading, and business acquisitions.

Who Exactly Is CMC? The Rise of "China's Murdoch"

Founded by Li Ruigang in 2015, CMC is a leading comprehensive media and entertainment group in China, with headquarters in Shanghai, Beijing, and Hong Kong. Li, who previously served as president of Shanghai Media Group and director of Shanghai Television, left his public positions to dedicate himself fully to CMC and its associated capital arm, CMC Capital. His industry reputation as "China's Murdoch" stems from his ability to build a media empire across multiple platforms and geographies.

The CMC portfolio spans film and television content production, media operations, cinemas, performing arts, gaming, and intellectual property development. Its holdings include prominent industry names such as Hong Kong's TVB, Shaw Brothers Pictures, Daylight Entertainment, CMC Pictures, Oriental DreamWorks, and UME Cinemas. Financial data shows CMC generated revenues of 4.571 billion yuan, 4.022 billion yuan, and 3.178 billion yuan in 2023, 2024, and 2025 respectively, with net profits of 287 million yuan, 363 million yuan, and 297 million yuan over the same periods. As of the end of 2025, the group's total assets stood at 21.359 billion yuan.

Significantly, CMC is currently advancing capital operations for its core assets. In January 2026, Shaw Brothers announced plans to acquire, through share issuance, a 50% stake in Daylight Entertainment, 100% of CMC Pictures, and Shanghai Siyuan—which owns more than 50 high-end UME cinemas—along with other core film assets, in a deal valued at 4.577 billion yuan. Upon completion of this transaction, CMC's stake in Shaw Brothers would rise from 29.94% to 59.74%, securing absolute control. Against this backdrop, taking over ST Huayi would give CMC two listed platforms simultaneously—one in Hong Kong and one in mainland China's A-share market.

The Precipice: Eight Consecutive Years of Losses and Insolvency

The company that CMC is rescuing has fallen into a deep abyss. Huayi Brothers, which launched on the ChiNext board in 2009 as the first film company to list on China's A-share market, once produced such box office phenomena as "Cell Phone," "A World Without Thieves," "Assembly," "If You Are the One," and "Aftershock." At its peak, the company's market value surpassed 80 billion yuan. However, since 2018, the company has been mired in sustained losses, accumulating over 8 billion yuan in cumulative deficits over eight years, with market value now shrinking to approximately 5 billion yuan.

In the first half of 2026, revenue came in at just 85.5477 million yuan, down 44.10% year-on-year, while net losses attributable to shareholders reached 36.3851 million yuan. By the end of June, shareholders' net assets had turned negative at -58.5646 million yuan, with the debt-to-asset ratio climbing to 100.28%—meaning the company is technically insolvent. The liquidity situation is even more severe: cash and equivalents stand at merely 14.0739 million yuan, against short-term borrowings of 184 million yuan and non-current liabilities due within one year of 304 million yuan. Total current liabilities amount to 1.596 billion yuan, exceeding current assets by 1.143 billion yuan. Restricted assets have a combined book value of 1.167 billion yuan, and multiple bank accounts have been frozen. Overdue debts to banks and other financial institutions total 60.5474 million yuan.

The direct catalyst for the restructuring came on April 15, 2026, when creditor Beijing Tailuifeike Technology Co., Ltd. filed a restructuring and pre-restructuring application with the Jinhua Intermediate People's Court in Zhejiang Province, citing ST Huayi's inability to repay due debts and apparent lack of solvency, while asserting the company retains restructuring value. The principal claim amounts to approximately 11.4 million yuan. On April 23, the court initiated pre-restructuring proceedings, and on April 30, the company's stock was placed under other risk warnings, with its ticker changed to "ST Huayi."

The Road Ahead: A Complex Asset Package and Lingering Doubts

From an 80-billion-yuan market value to less than 5 billion, from "the first film stock" to an insolvent ST company, Huayi Brothers' fall mirrors the end of a high-leverage expansion cycle in China's film industry. Li Ruigang's 836-million-yuan entry secures a complicated asset package—one burdened with debt, a shrinking core business, and a subsidiary that has itself entered pre-restructuring proceedings.

In its announcement, CMC has pledged to "leverage its industrial and resource advantages to help improve ST Huayi's profitability and introduce business resources or inject synergistic assets at the appropriate time." However, the immediate reality is stark: ST Huayi's first-half revenue fell below 100 million yuan, while CMC's own revenues have been declining annually, from 4.571 billion yuan to 3.178 billion yuan. Whether an industry investor with shrinking revenue can genuinely fuel growth for a listed company whose revenue has all but dried up remains the core question hanging over this restructuring deal. And all of this presupposes that the restructuring plan first secures approval from the creditors' meeting and the court. Until then, this remains a promise yet to be fulfilled.