Hong Kong producer-distributor China Star is planning a rights issue to raise around $12m (HK$95m), of which $9.6m (HK$75m) will be pumped into production.
However the company is undergoing a capital reorganisation prior to the rights issue due to a collapse in its share price which has slumped from 26 HK cents to less than two HK cents since January. China Star's value was also badly hit by a - since retracted decision - by the Hong Kong stock exchange to de-list low-price and loss-making companies, a move that prompted many investors to dump so called 'penny shares.'
Following the restructuring - in which every 50 shares will be consolidated into one - the company will double its capital base by issuing 76.173 million shares at a price of HK$1.25 per share.
China Star reported a net loss of HK$191.2m for the year to December 2001and has accumulated losses of around HK$216m. However the company co-financed and distributed five of Hong Kong's top 10 domestic movies last year, and four so far this year, including current hits My Left Eye Sees Ghosts and Mighty Baby.