CHINA ENERGY (00228) announced that the board of directors proposes to implement a capital reorganization in the following manner, including share consolidation, capital reduction and share subdivision: Immediately before the capital reorganization takes effect, the share consolidation will consolidate every 40 issued and unissued existing shares with a par value of HK$0.05 each into 1 consolidated share with a par value of HK$2.00 each; The company will reduce the issued share capital by canceling HK$1.95 of the paid-up share capital of each issued consolidated share of the company at that time, reducing the par value of each issued consolidated share from HK$2.00 to HK$0.05. As of the date of this announcement, based on the company's existing 12.165 billion issued shares, the capital reduction will generate proceeds of HK$593 million which will be transferred to the company's contributed surplus account, and such contributed surplus account will be applied by the directors in such manner as they consider appropriate under the Companies Law and the company's articles of association; Immediately after the capital reduction takes effect, each authorized but unissued consolidated share with a par value of HK$2.00 each within the company's authorized share capital will be subdivided into 40 authorized but unissued adjusted shares with a par value of HK$0.05 each. After the share subdivision takes effect, the company's authorized share capital will be changed to HK$1.25 billion, with the creation of a sufficient number of additional adjusted shares to increase the company's authorized share capital to HK$1.25 billion, divided into 25 billion shares with a par value of HK$0.05 each. After the capital reorganization takes effect, the board of directors proposes to conduct a rights issue at a subscription price of HK$1.57 per rights share on the basis of 1 rights share for every 2 adjusted shares held by eligible shareholders on the record date, issuing 152 million rights shares through the rights issue to raise a maximum of approximately HK$238.7 million in gross proceeds (before expenses). Assuming the rights issue is fully subscribed, and if there is no change in the total number of issued shares from the date of this announcement to the record date (inclusive), then apart from the results of the capital reorganization, the net proceeds from the rights issue are estimated to be approximately HK$236.7 million after deducting expenses. The company intends to use the net proceeds as additional capital reserves to capture business opportunities in the exploration, production and distribution of natural gas in China.