Comtec forced into shares consolidation

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The falling share price of Shanghai-based solar and project developer Comtec Solar has prompted the board to call an extraordinary general meeting (EGM) next month to consolidate stock.

Under the rules of the Hong Kong exchange where Comtec is listed, companies must maintain a share value of more than HK$0.01 (US$0.0013) and should draw up plans to consolidate shares once the stock price dips below HK$0.10. The closing price for Comtec shares before Friday’s announcement was HK$0.072, ensuring board lots of 2,000 shares were below the HK$2,000 per block minimum specified by the exchange.

The Comtec announcement promised details of an EGM – to be held on August 26 – would be released by August 9.

Shareholders will vote on whether to approve consolidating their stock into blocks of four shares each worth four times the value of the closing share price.

Investors will note the Comtec board’s admission that “the company does not have any concrete plan to conduct any fundraising activities in the next 12 months”, albeit caveated with the statement Comtec reserves the right to do so if circumstances are favorable.

Comtec raised RMB4.44 million (US$645,000) in November by selling a 10% holding in its Kexin lithium-ion battery EV and energy storage business to Singapore-based ISDN. An indication of the rising value of the Kexin unit – which Comtec had acquired 70% of in October 2017 – came when the parent company brought on board online gaming company The9 by offering up a further 9.9% of the unit for RMB9.8 million last month.