Dragon Group International is proposing a renounceable and non-underwritten rights issue of up to 896,325,824 new ordinary shares at $0.02 each, with up to 896,325,824 free detachable warrants.

Each warrant carrying the right to subscribe for one new ordinary share at US$0.03 each on the basis of four rights shares with four warrants for every one existing share held by shareholders of the company.

In the minimum subscription scenario, based on 552,253,768 rights shares with warrants to be issued, the net proceeds of the rights issue, after deducting estimated expenses of $0.6 million, is expected to be $10.4 million.

In the maximum subscription scenario, assuming all 896,325,824 warrants are exercised, the estimated gross proceeds arising from the exercise of the warrants will be US$26.9 million ($35.4 million).

The company intends to use the net proceeds raised from the rights issue for the repayment of bank borrowings, the repayment of amount due to holding company and working capital purposes.

Immediately after the completion of the rights Issue, Dragon Group also intends to undertake a consolidation of every four post-rights issue shares.

The rights issue is subject to the approval of shareholders at an extraordinary general meeting (EGM) to be convened.

Dragon Group has appointed Oversea-Chinese Banking Corporation as the manager for the rights issue.