Shin Hwa World plans capital reorganization, targets €31.5 million raise

Shin Hwa World Ltd, a Hong Kong-listed casino developer renowned for its Jeju Shinhwa World complex in South Korea, has unveiled a comprehensive capital reorganization strategy. Among its measures is a significant endeavour to raise HK$263.7 million (€31.5 million) through a rights issue.  

Earlier this month, the company released its financial report for the fiscal year 2023, showing a significant downturn in consolidated revenue and an alarming surge in losses. Based on the report, Shin Hwa World’s consolidated revenue in 2023 declined to approximately $128.8 million (€119.2 million), marking a 25.3 percent decrease from the previous year’s figure of approximately $166.1 million (€154.7 million).    

Capital reorganization details  

In its disclosure to the Hong Kong Stock Exchange, Shin Hwa World detailed the components of the capital reorganization. Alongside the rights issue, the company intends to execute a share consolidation. This entails consolidating every 10 existing shares of HKD0.01 each into one HKD0.10 share.    Additionally, a capital reduction will take place, rounding down each shareholder’s issued share capital to the nearest whole number and cancelling any fractional shares. The resulting surplus credits will be redirected to the company’s ‘surplus account.’  

Anticipated surplus  

With approximately 5.07 billion existing shares in circulation, Shin Hwa World Ltd expects to generate a surplus of approximately HK$45.6 million (€5.4 million) through the capital reduction process.  

Market response  

Following the announcement of the capital reorganization, Shin Hwa’s stock witnessed a notable decline of nearly 18 percent on Friday, signalling investor response to the proposed measures.  

Recent issues  

In December 2020, Yang Zhihui, Shin Hwa World’s shareholder, faced an investigation by the China Securities Regulatory Commission for suspected market manipulation. Subsequently, Yang resigned as a director of Shin Hwa in June 2023, marking a significant event in the company’s recent history.  

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