Fantasia Group successfully restructured its overseas debt of USD 4.655 billion through a combination of various tools to alleviate debt pressure.

Fantasia (01777) announced that it has obtained full support from the planned creditors at the planning meeting held on February 20, 2026, to approve the debt restructuring plan. Specifically, the plan includes: (i) Option one - for every $1 of the planned creditor's debt, they can receive short-term notes with a principal amount of $0.25 and mandatory convertible bonds with a principal amount of $0.20, at a discount of 55% compared to the relevant planned creditor's debt; (ii) Option two - for every $1 of the planned creditor's debt, they can receive long-term notes with a principal amount of $0.60 and an equivalent number of planned creditor shares at a price of $1.52 Hong Kong dollars per share, at a discount of 25% compared to the relevant planned creditor's debt; (iii) Option three - for every $1 of the planned creditor's debt, they can receive an equivalent number of planned creditor shares at a price of $1.52 Hong Kong dollars per share. Regarding the proposed debt restructuring, the company must pay certain consent and work fees to participating creditors and special committees in the form of planned fee shares and/or short-term notes. The company plans to issue a total of approximately 5.1437 billion planned creditor shares at a price of $1.52 Hong Kong dollars per share to subscribers on the effective date of the restructuring. Subscribers are planned creditors who have validly selected or been transferred or reassigned to option two and three of the restructuring plan. The company plans to issue approximately $501 million in principal amount of mandatory convertible bonds to subscribers on the effective date of the restructuring, with an initial conversion price of $1.52 Hong Kong dollars per share. Subscribers are planned creditors who have validly selected or been transferred or reassigned to option one of the restructuring plan. Based on the initial conversion price, a total of approximately 2.572 billion shares of mandatory convertible bond shares will be issued when all the convertible bonds are converted. The company plans to issue approximately $632.5 million in principal amount of short-term notes to subscribers on the effective date of the restructuring, including short-term notes issued as option one of the restructuring plan, and short-term notes to pay consent fees or work fees. The company plans to issue approximately $809.6 million in principal amount of long-term notes to subscribers on the effective date of the restructuring. Subscribers are planned creditors who have validly selected or been transferred or reassigned to option two of the restructuring plan. The company plans to issue a total of approximately 174 million consent shares and 1.364 billion work fee shares at a price of $0.10 Hong Kong dollars per share to subscribers on the effective date of the restructuring. Subscribers are participating creditors and special committees who hold early qualifying debt. Regarding shareholder loans, the company plans to implement loan capitalization on the effective date of the restructuring, whereby the company will issue approximately 43.76 billion shares of capitalized shares to Fantasy Pearl International Limited, at a price of $0.30 Hong Kong dollars per share, using the remaining principal amount of approximately RMB 1.212 billion of shareholder loans. After completion of the loan capitalization, the remaining principal amount of the shareholder loans will be considered fully repaid, and any accrued but unpaid interest will be waived on the effective date of the restructuring. Benny Zeng proposed providing or arranging a $6 million new shareholder loan to the company through Fantasy Pearl International Limited to fund certain expenses and costs under the proposed debt restructuring before or after the effective date of the restructuring. The new shareholder loan will be unsecured, without a fixed maturity date, and will accrue interest at an annual rate of 8%. In addition, the board of directors proposes to seek approval (by ordinary resolution at a special general meeting of shareholders) to increase the company's authorized share capital from HK$800 million (divided into 8 billion shares) to HK$3 billion (divided into 300 billion shares) by adding 220 billion unissued shares, which will rank equally in all respects with the existing shares. After the completion of the restructuring, Benny Zeng's shareholding will decrease from 57.41% to 39.94%, remaining the largest shareholder; public shareholders' ownership will decrease to 7.45%. The group will significantly reduce its debt by using issued short-term notes, long-term notes, mandatory convertible bonds, and planned creditor shares to settle the planned creditor's debts (including interest). As the maturity of the short-term and long-term notes exceeds 5 years, any newly issued notes will not be classified as a current liability for the group at the time of issuance. After the completion of the loan capitalization, the group will also offer a discount on the shareholder loans to further reduce the debt. The reduction in debt resulting from these transactions will significantly improve the overall financial position of the group and alleviate immediate liquidity pressure.