FangDD Announces US$21 Million Convertible Note Private Placement and Proposed Issuance of Class C Ordinary Shares

Rhea-AI Summary

Fangdd Network Group Ltd. (Nasdaq: DUO) has announced a $21 million convertible note purchase agreement with an investor, expected to close in February 2023. The note, maturing in six months with an 8% annual interest, can be converted into class A ordinary shares at a price equal to 64% of the higher of the average closing price of ADSs for the previous five days or $0.47. To maintain corporate structure, the company may issue up to 7,875,000 class C ordinary shares to a related party upon conversion. The transaction is exempt from registration under the Securities Act.

Positive

• Company raises $21 million through convertible note agreement.
• Note features an 8% annual interest rate and can potentially enhance liquidity.
• Conversion terms provide a potential upside for shareholders with a conversion price of 64% of market price.

Negative

• Convertible note creates potential dilution for existing shareholders upon conversion.
• Unsecured nature of the note means higher risk for investors in case of financial downturn.

SHENZHEN, China, Jan. 13, 2023 (GLOBE NEWSWIRE) -- Fangdd Network Group Ltd. (Nasdaq: DUO) (“FangDD” or the “Company”), a leading property technology company in China, today announced that it had entered into a convertible note purchase agreement, under which the Company will sell and issue a convertible promissory note in a principal amount of US$21 million (the “Note”) to an investor through private placement. The closing of the transactions is subject to the satisfaction of customary closing conditions and is expected to take place in February 2023.  

The Note will mature in six months following the issuance, bearing interest at the rate of 8% per annum which shall be payable on the maturity date. At the Company’s option, the term of the Note may be extended to a period no more than 364 days. At any time after the issuance and before the maturity date, the Note is convertible, in whole but not in part, into class A ordinary shares of the Company (the “Class A Ordinary Shares”) at the option of the holder thereof at a price equal to 64% of the higher of the following (adjusted by the ADS-to-share ratio): (i) the average closing price of the Company’s American depositary shares (the “ADSs”) for the last 5 days preceding the date of the conversion notice and (ii) US$0.47. Each ADS currently represents 375 Class A Ordinary Shares. Unless previously converted, the Company shall repay the outstanding principal amount plus all accrued but unpaid interest on the maturity date. The Note shall be an unsecured general obligation of the Company. Additional information regarding the private placement and the Note will be included in a Form 6-K to be filed by FangDD with the U.S. Securities and Exchange Commission (the “SEC”).

To maintain a stable corporate structure following the potential conversion of the Note, the Company has entered into a share subscription agreement, under which the Company has agreed to sell and issue up to 7,875,000 class C ordinary shares of the Company with the same rights, privileges and restrictions approved by the board of directors on November 29, 2022 to ZX INTERNATIONAL LTD, a British Virgin Islands company controlled by Mr. Xi Zeng, the chairman of the board of directors and chief executive officer of the Company, if the Company receives a conversion notice from the Note holder. The per share purchase price will be calculated based on the average closing price of the Company’s ADSs for the 30 trading days prior to the closing notice date and adjusted by the ADS-to-share ratio. Additional information regarding the Subscription Agreement will be included in a Form 6-K to be filed by FangDD with the SEC.

The sale and issuance of the Note (and the Class A Ordinary Shares upon conversion of the Note) and the class C ordinary shares are exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) of the Securities Act regarding transactions not involving a public offering and is made in reliance on, and in compliance with, Regulation D and/or Regulation S under the Securities Act, as applicable.

About FangDD

Fangdd Network Group Ltd. (Nasdaq: DUO) is a leading property technology company in China, operating one of the largest online real estate marketplaces in the country. Through innovative use of mobile internet, cloud, big data, artificial intelligence, among others, FangDD has fundamentally revolutionized the way real estate transaction participants conduct their business through a suite of modular products and solutions powered by SaaS tools, products and technology. For more information, please visit http://ir.fangdd.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “hope,” “going forward,” “intend,” “ought to,” “plan,” “project,” “potential,” “seek,” “may,” “might,” “can,” “could,” “will,” “would,” “shall,” “should,” “is likely to” and the negative form of these words and other similar expressions. Among other things, statements that are not historical facts, including statements about the Company’s beliefs and expectations are or contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement. All information provided in this press release is as of the date of this press release and is based on assumptions that the Company believes to be reasonable as of this date, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Ms. Linda Li
Director, Capital Markets Department
Phone: +86-0755-2699-8968
E-mail: ir@fangdd.com

FAQ

What is the amount of the convertible note issued by Fangdd (DUO)?

Fangdd Network Group Ltd. has issued a convertible note of $21 million.

What is the interest rate on the convertible note for DUO?

The convertible note bears an interest rate of 8% per annum.

When is the maturity date for the DUO convertible note?

The convertible note matures in six months from the issuance date.

What is the conversion price for the DUO convertible note?

The conversion price is set at 64% of the higher of the average closing price of the company's ADSs for the last five days or $0.47.

How many class C ordinary shares can Fangdd issue related to the convertible note?

Fangdd can issue up to 7,875,000 class C ordinary shares upon the conversion of the note.