C Cheng (HKG:1486) said it has been notified of a preliminary plan to restructure its investment in Element Investment after shareholder, Gain Sky Resources, failed to pay for its shares, according to a Dec. 19 Hong Kong bourse filing.

Shares of the architectural services provider were down 7% in Monday's late morning trade.

Gain Sky has not paid about 22.2 million yuan in consideration, representing 40.36% of Element Investment's issued share capital, under a 2023 shareholders' agreement, the company said.

Under the proposed restructuring, Gain Sky would arrange for a new investor to inject funds directly into Element Investment's China subsidiary, replacing the unpaid consideration.

The unpaid shares held by Gain Sky would then be cancelled or reduced through a proposed share capital reduction.

If completed, Element Investment would become a non-wholly owned subsidiary of C Cheng, with its financial results consolidated into the group's accounts, resulting in a deemed acquisition.