HG SEMI (06908) plans to issue shares and convertible bonds to early redeem promissory notes, settling HK$41.4176 million of debt without cash payment.

HG SEMI (06908) announces that on February 10, 2026, the Company issued to the holder Red Mont Global Limited a promissory note of HK$40.816 million as consideration for the acquisition of the entire equity interest in Red Mont HK Limited, with the note maturing in August 2027. On November 6, 2026 (after trading hours), the Company entered into an early redemption agreement with the holder in respect of the early redemption of the note by the Company. In connection with the early redemption agreement, the Company and the holder have agreed and confirmed that the total outstanding amount is approximately HK$41.4176 million. Subject to the occurrence of the early redemption, the note will cease to accrue any interest after the date of the early redemption agreement. Both parties have agreed that the Company will redeem the note in full early, on the conditions that the Company (a) on the completion date, allots and issues to the holder (or its nominee) a total of approximately 115.5 million consideration shares at an issue price of HK$0.22 per consideration share, to settle approximately HK$25.4176 million of the total outstanding amount; and (b) on the completion date, issues to the holder (or its nominee) bonds convertible into approximately 61.5385 million conversion shares at a conversion price of HK$0.26 per conversion share upon full conversion, to settle the balance of HK$16 million of the total outstanding amount. The announcement states that the early redemption provides the Group with a valuable opportunity to complete full settlement of the note without utilizing the Company's existing financial resources. Upon completion, the majority of the total outstanding amount will be settled through the issuance and allotment of consideration shares without any cash outlay, thereby preserving funds for semiconductor research and development and equipment procurement. The cashless settlement through consideration shares not only strengthens the Group's capital base and improves its net asset position, but also substantially reduces debt, which will in turn improve the gearing ratio. The consideration shares represent approximately 9.86% of the total number of existing issued shares, and approximately 8.97% of the total number of issued shares as enlarged by the allotment and issuance of the consideration shares. Accordingly, the improvement in financial position is achieved without substantial dilution of the equity interests of existing shareholders. In addition, replacing the original note with two-year bonds extends the debt maturity by more than one year and lowers the interest rate from 2% per annum to 1%, thereby giving the Group more buffer and time in managing its debt structure while reducing the Group's ongoing financing costs.