The board of SINOFORTUNE-NEW (ASX: 08123) has acknowledged recent unusual movements in the company's share price and trading volume.

Following inquiries considered reasonable under the circumstances, the board stated it is not aware of any reasons for these fluctuations, nor any information that must be disclosed to prevent a false market, or any inside information requiring disclosure under the Securities and Futures Ordinance, except for the matter detailed below.

It is reported that Mr. Wang Jiawei, an executive director and a substantial shareholder, is currently in discussions with the company regarding a potential subscription agreement.

This agreement would involve capitalizing all or part of the shareholder loans owed to him by the company, constituting a potential debt-to-equity conversion.

As of the date of this announcement, Mr. Wang holds an interest in 35,389,932 shares, representing approximately 27.4% of the company's issued share capital.

Should the proposed debt conversion proceed, it may result in a change of control of the company.

This would oblige Mr. Wang and any parties acting in concert with him to make a mandatory general offer under Rule 26.1 of the Takeovers Code.

The company is also considering a potential rights issue to be conducted following the completion of the possible debt conversion and the conclusion of any resulting offer.

The potential rights issue may or may not be underwritten, and Mr. Wang may or may not commit to subscribing for his entitlement in shares he holds or will hold an interest in after the offer period, if applicable.