connected transaction subscription of new shares proposed grant of ...

the Subscription Price (which is above the prevailing market price of the Shares), andis reasonably perceived to be less attractive to the general public Shareholders whencompared with rights issue or open offer with issue price lower than the prevailingmarket price.In light of the above, the Board is of the view that equity financing by way of theSubscription is the most appropriate mean of raising additional capital as (i) it is morepracticable and direct under a volatile market and the uncertain global market conditionscurrently prevailing; (ii) it is less costly and no interest burden is imposed; (iii) it is lesstime consuming; and (iv) the Subscription Price is higher than the prevailing marketprice of the Shares which would make other means of equity financing to be impractical.The Board is of the views that it is in the interest of the Group and the IndependentShareholders as a whole to raise funds by the Subscription, which allows the Groupto strengthen its capital position and equip the Group with the financial flexibility toachieve the Group’s business objectives and to issue the Subscription Shares at an issueprice higher than the prevailing market price of the Shares.In addition, the Subscription signifies the confidence of the Substantial Shareholder inthe existing and future development potentials of the Group. With the continuing supportof the Substantial Shareholder of the Company, this will ensure business stability andcontinuity of the Group which is crucial and beneficial to the long-term development ofthe Group.Overall, the Directors (excluding the independent non-executive Directors whoseviews will be given after taken into account the advice from the Independent FinancialAdviser) consider that the terms of the Subscription Agreement are fair and reasonableand in the interests of the Company and the Shareholders as a whole.USE OF PROCEEDSThe gross proceeds of the Subscription will amount to HK$300 million. The netproceeds from the Subscription, after the deduction of the professional and other relatedexpenses, are estimated to be approximately HK$297.5 million, representing a net issueprice of approximately HK$0.079 per Subscription Share.The Board intends to apply the net proceeds for pursuing suitable acquisition and/orinvestment opportunity(ies) (which the Group has not identified any specific acquisitiontargets and/or investment opportunities as at the date of this announcement and iscurrently actively exploring) that are complementary or offer synergy to the Group’sexisting business or are considered to be advantages to or in line with the long-termbusiness strategies of the Group. Appropriate announcement will be made by theCompany as and when appropriate and in accordance with the GEM Listing Rules if anyspecific acquisition and/or investment opportunity is identified. To the extent that suchnet proceeds allocated for acquisition and/or investment purposes is not required to befully utilized, it would be used to fund the general working capital of the Group.8