Blockchain technology company BC Tech raises 700 million through a share allotment to cryptocurrency investor Liu Shuai. Industrial stock shell king Gao Zhenshun’s holdings diluted to 29.96%.

Blockchain Firm BC Tech Raises $700 Million through Share Allotment to Cryptocurrency Investor Liu Shuai, Diluting Industrial Tycoon Gao Zhenshun's Stock Holding to 29.96%

Source: Hong Kong Economic Daily Editor: Techub News-June

OSL, a virtual asset trading platform licensed by the Securities and Futures Commission, was suspended before the market opened on Monday (13th) to announce insider information. On the same day, BC Technology, the parent company of OSL, announced the sale of 90% equity of “Shanghai Jingwei Enterprise Development,” a property management company in Shanghai, for a price of RMB 23 million (approximately HKD 24.6 million) in cash. However, BC Technology continued to suspend trading and announced that it will publish an announcement regarding the issuance of new shares by the company.

After the close of trading on Tuesday (14th), BC Technology issued another announcement stating that it will issue 187.6 million new shares to Liu Shuai’s BGX, a cryptocurrency investor, accounting for approximately 42.79% of the existing share capital, at a price of HKD 3.8 per share, a discount of about 22.76% from the pre-suspension price of HKD 4.92. This share offering is expected to raise HKD 713 million, with a net amount of HKD 710 million after deducting expenses, and the resumption of trading will take place on Wednesday (15th).

Liu Shuai’s shareholding slightly exceeds Gao Zhenshun’s side in the future

The shareholding of Gao Zhenshun, the major shareholder of BC Technology, and Lu Jianbang’s East Harvest will be diluted from 42.77% to 29.96%, while Liu Shuai’s shareholding will reach 29.97% in the future.

BC Technology stated that approximately 43% of the raised funds will be used for potential mergers and acquisitions of digital asset and blockchain platform companies; approximately 29% will be used for the development of digital asset platform technology; approximately 14% will be used to meet capital requirements; and approximately 14% will be used for general operating funds.

Liu Shuai intends to nominate two individuals to the Board of Directors

Liu Shuai, who is about to take over BC Technology, is the founder of mainland equity investment company Shenzhen Qianhai Jun Chuang Fund and cryptocurrency investment institution Foresight Ventures.

The announcement mentioned that Liu Shuai plans to nominate BGX CEO Pan Zhiyong and Yang Chao as BC Technology directors.

BC Technology stated that its wholly-owned subsidiary originally held 90% equity of “Shanghai Jingwei Enterprise Development.” Shanghai Jingwei Enterprise Development was established in mainland China in 2014 and is engaged in business park management and other businesses. Currently, the target company leases related properties to the owner and subleases them to a single tenant, which operates shared workspaces under the name WeWork.

BC Technology manages properties in Shanghai, now subleased to WeWork

In the fiscal year 2022, the target company’s net after-tax profit is approximately RMB 9.69 million. As of the end of September, the net asset value of the target company is about RMB 38.5 million, and the net asset value excluding intangible assets is also about RMB 25.7 million.

BC Technology stated that the sale of equity in the target company is intended to allocate more resources to the digital asset and blockchain platform business, as the company’s growth focus and core business. BC Technology expects to record a pre-tax loss of RMB 18.5 million (approximately HKD 19.8 million) for the sale, mainly reflecting the difference between the net asset value and the sale price.