China Dongxiang (Group) Co., Ltd. has signed settlement deeds with seven current and former executives to unwind long-standing share-based incentive loans through a four-pronged arrangement: (1) off-market share buy-backs, (2) consideration set-off, (3) loan waiver and (4) connected-transaction clearance.
Key transaction terms • Share buy-back: 256.09 million shares (4.34 % of issued capital) to be repurchased at HK$0.285 each, totalling HK$72.99 million. • Set-off: The buy-back consideration plus HK$6.47 million retained dividends will be offset against HK$281.74 million outstanding vendor subscription loans. • Loan waiver: After set-off, the group will waive an estimated HK$202.28 million balance. • Additional cash inflow: Former CEO Zhang Zhiyong will pay HK$20.00 million to the company as goodwill compensation for advisory and restructuring costs.
Pricing metrics The buy-back price equals the last trading day close and represents discounts of 1.04 % to the 10-day average and 25.00 % to the 90-day average. It is 83.40 % below the group’s audited net asset value per share of HK$1.717 as of 31 March 2026.
Impact on capital structure Post-completion, issued shares will fall from 5.90 billion to 5.64 billion. The Chen Family Group’s stake will rise from 43.62 % to 45.60 %, while public float will remain above the 25 % regulatory threshold.
Outstanding loans Before the settlement, nine borrowers owed HK$344.31 million secured against 312.09 million charged shares (5.29 % of issued capital). Subscription loans for two remaining borrowers (Ren Yi and Song Li) are not included and remain due by April 2028.
Rationale Management cited (i) diminished recoverability of the 1 % per-annum loans amid share-price weakness, (ii) potential market pressure from forced share disposals, and (iii) cost and reputational risks of legal recovery. The arrangement crystallises value, eliminates further credit risk and avoids cash outflow, as buy-back consideration is settled via set-off.
Financial backdrop • FY 2025: net profit after tax RMB207.0 million. • FY 2026: net loss after tax RMB158.0 million; impairment of RMB181.7 million taken on these loans. • 31 Mar 2026: total assets RMB9.71 billion; net assets attributable to shareholders RMB8.73 billion.
Regulatory process The buy-back constitutes an off-market share repurchase requiring: 1. SFC Executive approval under Rule 2 of the Share Buy-backs Code. 2. At least 75 % approval from disinterested shareholders at an extraordinary general meeting. 3. Reporting and announcement compliance for a connected transaction involving executive director Lyu Guanghong; circular distribution targeted by 14 Aug 2026.
Governance An independent board committee of four INEDs will review the terms. Altus Capital Limited has been appointed as independent financial adviser.
Completion is expected on the 20th business day after all conditions are satisfied; if unmet by 20 Jan 2027, the deeds will lapse. Shareholders are advised to exercise caution pending approvals.