ZJ UNITED INV (08366) has announced a board proposal to implement a capital restructuring, involving shares consolidation, capital reduction, and shares subdivision, as detailed below:

(i) Shares consolidation: Every 20 existing shares of par value HK$0.01 each will be consolidated into one consolidated share of par value HK$0.20 each.

(ii) Capital reduction: Any fractional consolidated shares resulting from the consolidation will be cancelled. The paid-up capital on each issued consolidated share will be reduced from HK$0.20 to HK$0.01 by cancelling HK$0.19 per share.

(iii) Shares subdivision: Immediately following the capital reduction, each authorized but unissued consolidated share of par value HK$0.20 will be subdivided into 20 adjusted shares of par value HK$0.01 each.

(iv) The credit arising from the capital reduction will be applied to offset the company's accumulated losses. Any remaining credit balance after offsetting will be transferred to the company's distributable reserve account, which may be utilized in any manner permitted by applicable laws and the company's memorandum and articles of association, as deemed appropriate by the board.

As of the announcement date, the existing shares are traded on the Stock Exchange in board lots of 10,000 existing shares. The board proposes to change the board lot size from 10,000 existing shares to 5,000 adjusted shares, subject to approval by shareholders (or independent shareholders, as applicable) at an extraordinary general meeting of resolutions approving the capital restructuring, rights issue, placing agreement, underwriting agreement, and the transactions contemplated thereunder.

Upon the capital restructuring taking effect, the board proposes to conduct a rights issue at a subscription price of HK$0.36 per rights share, on the basis of one rights share for every one adjusted share held by eligible shareholders on the record date. This will result in the issuance of up to 78.86 million rights shares, raising gross proceeds of up to approximately HK$28.39 million (before expenses). Assuming full subscription of the rights issue, the net proceeds (after expenses) are estimated to be approximately HK$26.0 million (assuming no change in the total number of issued shares from the announcement date to the record date, except for the capital restructuring).

The company intends to apply the net proceeds as follows: (i) no less than 60% of the net proceeds will be used to repay outstanding debts; and (ii) the remaining net proceeds will be used as general working capital for the group.