The Public And Net Fund Raised By SJ Global Is No More Than HK $700 Million

      On January 27, the board of directors proposed that on the record date, each holder of two shares would be issued with one right issue share at a subscription price of HK $0.75 per share, a 25.00% discount from the latest closing price of HK $1.00 per share. No less than 944 million and no more than 957 million rights shares would be issued, and the total amount of money raised would not be less than about HK $708 million and no more than HK $1.00 per share About HK $718 million. The net proceeds will be no less than HK $689 million and no more than HK $700 million, of which HK $300 million will be used for it costs, including system upgrading and data migration, and the development of new internal information resources. The remaining funds will be used for administrative and other expenses, including rental expenses, marketing and logistics expenses.

From the date of this announcement to the record date, there has been no change in the issued capital stock of 1.887 billion shares. According to the proposal of rights issue, the number of Rights shares allotted and issued is equivalent to about 50% of the company's existing issued share capital, and about 33.33% of the company's issued share capital after the completion of the rights issue.

According to the announcement, SJ global is mainly engaged in the retail, wholesale distribution and licensing business of high-quality ready-made clothes and non clothing products designed by esprit, a world-famous brand. As of June 30, 2020, the group's loss was HK $3.992 billion, an increase of 86.19% compared with the loss of HK $2.144 billion as of the same period in 2019. Overall sales have experienced a continuous decline, with revenue of HK $9.216 billion for the year ended June 30, 2020, 21.10% lower than that of HK $11.681 billion in the same period of 2019. The closure of retail stores may further affect the group's earnings in the near future.

As of June 30, 2020, the cash, bank balance and deposits of SJ global were only HK $2.288 billion, and the net asset value dropped by 58.74% to HK $2.77 billion. The existing loan financing of the group has been suspended or expired, so it is necessary to maintain a strong cash position to quickly replenish working capital.

      In order to reduce the debt level and improve the financial situation, the group has considered other fund-raising schemes, including but not limited to debt financing and equity financing, such as allotment of new shares and public offering. Equity financing is a better and more feasible option for the company than debt financing, because the rights issue can provide the qualified shareholders with the option to sell their allotments Compared with the public offering, offering shares is more advantageous. The group will have more cash to allocate working capital after receiving additional cash from the self financing shares, thus enhancing the group's overall trade strength and increasing its income and profit margin.