China Ground Source Energy (HKG:8128) said it has entered into a letter of intent (LOI) for the placement of 850 million new shares to subscriber China Energy Conservation and Environmental Protection (Hong Kong) Investment Company Limited at HK$0.41 per share, or HK$348.5 million in total.

Representing 29.16% of China Ground Source Energy's enlarged issued share capital, the new shares will have an 18-month lock-up period.

The net proceeds will be approximately HK$347.5 million and will be mainly used as general working capital for development of the company's business in application of shallow ground energy as alternative energy for heating and/or for future investment opportunities for energy conservation and environmental protection.

Trading in the shares of China Ground Source Energy will resume this morning.

The subscriber is wholly owned by China state-owned enterprise China Energy Conservation and Environmental Protection Group (CECEP).

Upon completion of the subscription, the subscriber would become the single largest substantial shareholder of China Ground Source Energy. Pursuant to the LOI, the subscriber has warranted that the three nominees to be nominated by it to the board of directors of China Ground Source Energy would propose at the board meetings and support the distribution of dividends of not less than 15% of the net profit after tax of the company to the shareholders per annum.

The placing price per share represents 9.89% discount to HK$0.455, the stock's last trading price before suspension of trading.

Source:chinesestock.org