The board of FEG HOLDINGS (01413) has announced the termination of a key service agreement, leading to the cancellation of its proposed rights issue and associated placement agreement.

On June 3, 2026, the company's subsidiary, Hangzhou Yangchuang, received a formal termination notice from its project partner, Xiamen Tengruiyuan. The notice stated that Xiamen Tengruiyuan no longer wished for Hangzhou Yangchuang to continue the project due to significant adjustments in the overall cooperation model and the implementing entity.

As the service agreement had not yet been executed—with no construction commenced, no payments made, and no personnel deployed—both parties agreed to terminate it with neither party liable for any breach.

The proposed rights issue was primarily intended to fund the project under this now-terminated service agreement. With the primary purpose for the capital raising eliminated, the board concluded that proceeding with the rights issue was no longer in the company's or its shareholders' best interests, as it would raise funds without a clear and concrete use.

Consequently, the company decided against proceeding with the rights issue. A key condition for the rights issue was that the placement agreement with sponsoring broker Ding Shi Securities Limited remained in full force and not terminated.

In line with the board's decision, the company and Ding Shi Securities mutually agreed to terminate the placement agreement, effective June 3, 2026. This failure to meet the placement condition means the rights issue will not proceed and is now void.

As a result of the rights issue cancellation, the related underwriting and compensation arrangements will not take effect, and no unsubscribed rights shares will be placed.