Cosco Technology Adjusts the Use of Raised Funds to Optimize the Management of 1.3 Billion Yuan in Fundraising Projects

On March 18, Shenzhen Kesi Technology Co., Ltd. (Stock Code: 688788,简称 “Kesi Technology”) announced that the Board of Directors approved a proposal to use its own funds to pay part of the funds for the fundraising projects and to replace an equivalent amount with the raised funds, as well as to adjust the repayment period for personnel expenses covered by the raised funds. This move aims to improve the efficiency of fund utilization, optimize fund management processes, and ensure the smooth implementation of the fundraising projects.

Basic Information on Raised Funds

Kesi Technology raised a net amount of 1.911 billion yuan through an initial public offering in 2020, mainly for three major fundraising projects. According to the announcement, the specific details of the raised funds investment projects are as follows:

Unit: 10,000 yuan

Prepayment with Own Funds and Equal Replacement Mechanism

The announcement states that because expenses such as rent, property fees, water and electricity costs related to the fundraising projects are difficult to split between project and non-project expenditures, the company will adopt a “prepay with own funds, then replace with an equivalent amount of raised funds” approach. The specific process includes:

2. The finance department regularly compiles detailed lists of payments made with own funds for the fundraising projects, which are approved internally and then transferred from the dedicated raised funds account to the company’s own funds account on an equal basis.
3. The finance department is responsible for maintaining detailed ledger records, recording transaction times, accounts, corresponding projects, and amounts for each transaction.
4. The sponsor will conduct ongoing supervision through on-site inspections, written inquiries, and other methods.

The company emphasizes that the funds paid in advance with own funds for the fundraising projects will be replaced with an equivalent amount of raised funds within six months to ensure compliance with fund usage regulations.

Adjustment of the Personnel Expense Replacement Period

Kesi Technology also announced an adjustment to the replacement period for personnel expenses covered by the raised funds. Before the adjustment, the company transferred an equivalent amount from the dedicated raised funds account after aggregating and calculating personnel expenses incurred for each project monthly. After the adjustment, a “periodic aggregation and calculation” method will be adopted, extending the replacement period to be completed within six months.

The announcement explains that this adjustment is mainly based on the actual payment situation of personnel expenses. Since salary payments, social security, and housing fund contributions are handled through different banking systems, involving cross-departmental cooperation and interbank settlement cycles, extending the replacement period can effectively avoid short-term cash flow pressures caused by interbank transfers, holidays, and other factors. It provides the finance department with more time to complete expense aggregation, allocation, and reconciliation, ensuring the accuracy and compliance of the replacement amount.

Regulatory Authority Opinions

The company’s independent directors’ special meeting believes that this adjustment is a reasonable arrangement based on the company’s actual operations, which will help improve the efficiency of fund use and reduce financial operational risks. There is no intention to covertly change the investment direction of the raised funds or harm the interests of the company and shareholders.

CITIC Securities Co., Ltd., the sponsor, also issued an inspection opinion, stating that the matter has undergone necessary review procedures, complies with relevant laws, regulations, and normative documents, and will not result in changes to the investment projects funded by the raised funds. There is no objection to this matter.

Impact on the Company

Kesi Technology states that this adjustment is a practical operation based on business needs, which can effectively ensure the normal progress of the fundraising projects and improve fund utilization efficiency. It will not affect the normal operation of the company’s fundraising investment projects or daily operations, nor will it covertly change the investment direction of the raised funds or harm the interests of the company and shareholders.

This matter has been approved at the 7th meeting of the company’s 4th Board of Directors and does not require submission to the shareholders’ meeting for approval.

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