Century Entertainment Reduces Debt via Capital Reorganization

Bermuda-based gaming investor Century Entertainment International Holdings announced in a filing to the Hong Kong Exchanges and Clearing (HKEX) and the Stock Exchange of Hong Kong (SEHK) December 30, 2020 a capital reorganization plan.

4-Step Capital Reorganization

The Board of Century Entertainment proposed the company’s shareholders to approve a capital reorganization plan which consists of 4 main points: share consolidation, capital reduction, share subdivision, and transfer of the credit arising from the capital reduction.

Under the share consolidation, every 5 issued and unissued existing company shares with a par value of HK$0.20 will be consolidated into 1 consolidated share of par value HK$1.00, while cancelling any consolidated share in the issued share capital of any fractional value.

Following on the share consolidation, each consolidated share of par value of HK$1.00 will undergo a capital reduction to HK$0.01 and the paid-up capital to the extent of HK$0.99 on each consolidated share will be cancelled.

Every unissued consolidated share of par value of HK$1.00 each in the authorized share capital of Century Entertainment will be subdivided into 100 new shares of par value of HK$0.01 each.

Finally, the credit arising from the capital reduction scheme will be transferred to the contributed surplus account as per the meaning of the Companies Act, proposing to use the amount to “set off the accumulated losses of the company in full or be applied in any other manner as may be permitted under the Bye-laws and all applicable laws in Bermuda”.

Upon completion of the capital reorganization, Century Entertainment will have authorized share capital of HK$4 million divided into 400 million new shares each valued at HK$0.01.

With greater flexibility in terms of raising capital in the future, the Board proposes the authorized share capital to be increased to HK$200 million, comprising of 20 billion shares valued at HK$0.01 each by the creation of additional 19.6 billion new shares.

Debt Reduction

In a connected transaction, Century Entertainment entered into a subscription agreement with its executive director, chairman and CEO Ng Man Sun, for a convertible bond with a principal amount of HK$50 million, subject to the satisfaction of the capital reorganization conditions.

The payment obligation amount under the subscription agreement will be discharged against the indebted amount of the company towards Ng Man Sun and his controlled corporation East Legend, HK$71,271,758 as at the date of the filing, and the remaining balance of HK$21,271,758 uncovered by the convertible bond will be payable to the subscriber in cash upon completion of the agreement.

The HK$50 million amount will be covered by 5 billion new shares worth HK$0.01 each and would see Ng’s current 27.74% stake in the company increase to the controlling 59.40%.