Flowing Cloud Technology Ltd (Flowing Cloud) has announced plans to widen its capital base and fund expansion through a sizeable rights issue and a parallel increase in authorised share capital.
The board proposes to lift authorised share capital from US$50,000 (250 million shares) to US$400,000 (2 billion shares) by creating an additional 1.75 billion shares. Approval will be sought at an extraordinary general meeting (EGM) scheduled for 17 August 2026.
Concurrently, the company intends to launch a non-underwritten rights issue on the basis of four rights shares for every one existing share held on the 27 August 2026 record date. Key terms are:
• Issue size: up to 520.12 million new shares, equivalent to 400% of current issued shares and 80% of enlarged issued capital. • Subscription price: HK$0.60 per rights share, a 24.05% discount to the HK$0.79 closing price on the last trading day (18 June 2026) and a 5.96% discount to the theoretical ex-rights price of HK$0.638. • Gross proceeds: approximately HK$312.10 million; estimated net proceeds: HK$306.80 million. • Nil-paid rights trading: 1–8 September 2026; final acceptance and payment deadline: 11 September 2026. • Target completion and listing of fully-paid shares: 8 October 2026.
Use of proceeds is earmarked as follows: HK$163.80 million (53.39%) to expand artificial-intelligence R&D and infrastructure; HK$93.00 million (30.31%) to repay short-term bank debt currently totalling about RMB96 million due within 12 months of completion; and HK$50.00 million (16.30%) for general working capital, including marketing, salaries, professional fees and rentals.
The rights issue will proceed irrespective of take-up level. Unsubscribed shares will be placed to independent investors on a best-efforts basis; any remaining shares will be cancelled, reducing the final issue size. Shareholders who do not subscribe in full will face dilution. If fully subscribed, total issued shares will rise from 130.03 million to 650.14 million.
Because the transaction enlarges share capital by more than 50% within 12 months, it requires minority shareholder approval under Listing Rule 7.19A. Executive Director and CEO Mr Wang Lei, who holds 25.76% of issued shares, will abstain from voting. An independent board committee and an independent financial adviser will opine on the terms.
Flowing Cloud cites funding needs for AI-centric growth, balance-sheet strengthening and working-capital support as the rationale for choosing an equity rights issue over debt financing or share placement alternatives.