TIDMGINV
RNS Number : 9631E
Global Invacom Group Limited
24 October 2018
GLOBAL INVACOM GROUP LIMITED
(Company Registration No. 200202428H)
(Incorporated in the Republic of Singapore)
PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP SHARE
CAPITAL OF TACTILIS SDN. BHD.
PROPOSED SUBSCRIPTION OF CONVERTIBLE NOTES WITH 5.0% COUPON RATE
TO BE ISSUED BY TACTILIS SDN. BHD.
PROPOSED ISSUANCE OF UNSECURED REDEEMABLE STRUCTURED CONVERTIBLE
NOTES WITH 1.0% COUPON RATE
A. INTRODUCTION
1. Proposed Acquisition
The board of directors ("Board" and each director, a "Director")
of Global Invacom Group Limited ("Company", together with its
subsidiaries, the "Group") is pleased to announce that the Company
has on 23 October 2018, entered into a conditional sale and
purchase agreement ("SPA") with Tactilis Pte. Limited ("Vendor"),
pursuant to which the Company will acquire the entire issued and
paid-up share capital of Tactilis Sdn. Bhd. ("Target") held by the
Vendor on the terms and subject to the conditions of the SPA
("Proposed Acquisition").
The Proposed Acquisition, if completed, is expected to result in
a very substantial acquisition or a reverse-takeover of the Company
pursuant to Rule 1015 of the Mainboard Listing Manual ("Listing
Manual") of the Singapore Exchange Securities Trading Limited
("SGX-ST"). The Proposed Acquisition, if completed, would also
constitute a reverse takeover for the purposes of the AIM Rules for
Companies (the "AIM Rules"). Accordingly, the Proposed Acquisition
is subject to, inter alia, the approval of the SGX-ST and the
shareholders of the Company ("Shareholders") at an extraordinary
general meeting of the Company to be convened pursuant to Rule 1015
of the Listing Manual.
Please refer to Section B of this Announcement for further
details relating to the Proposed Acquisition.
2. Proposed Target Convertible Notes Subscription
On 23 October 2018, the Company has also entered into a
subscription agreement ("Target Convertible Notes Subscription
Agreement") with the Target in respect of the proposed subscription
by the Company of the convertible notes with 5.0% coupon rate in
the Target ("Target Convertible Notes"), pursuant to which the
Company shall subscribe for the Target Convertible Notes ("Initial
Target Convertible Notes") in a principal amount of US$2,000,000
("Initial Fund") in two (2) equal tranches ("Initial Fund
Injection"). The Company has the option to subscribe for additional
Target Convertible Notes ("Additional Target Convertible Notes")
with an aggregate principal amount of up to US$8,000,000.
Please refer to Section C of this Announcement for further
details relating to the proposed subscription of the Target
Convertible Notes ("Proposed Target Convertible Notes
Subscription").
3. Proposed RCN Issuance
On 23 October 2018, the Company has also entered into a
subscription agreement ("RCN Subscription Agreement") with (i)
Advance Opportunities Fund ("AOF"); (ii) Advance Opportunities Fund
I ("AOF I"); (iii) Advance Credit Fund SPC ("ACF") (for and on
behalf of Golden Fund SP) (collectively, the "Subscribers") and
(iv) Advance Capital Partners Asset Management Private Limited
("ACPAM") in connection with the issue by the Company to the
Subscribers of unsecured redeemable structured convertible notes
with 1.0% coupon rate due 2021 (collectively, the "RCN Notes" and
each, a "RCN Note") with an aggregate principal amount of up to
S$20,000,000 in four (4) tranches (the "Proposed RCN Issuance").
The four (4) tranches of the RCN Notes (each, a "Tranche") shall be
referred to as "Tranche 1 Notes", "Tranche 2 Notes", "Tranche 3
Notes" and "Tranche 4 Notes", respectively. The Tranche 1 Notes and
Tranche 2 Notes shall comprise sixteen (16) equal sub-tranches of
S$250,000 each. The Tranche 3 Notes and Tranche 4 Notes shall
comprise twelve (12) equal sub-tranches of S$500,000 each.
Please refer to Section D of this Announcement for further
details relating to the Proposed RCN Issuance.
B. PROPOSED ACQUISITION
1. INFORMATION RELATING TO THE TARGET AND THE VOR
Shareholders should note that information relating to the Target
and the Vendor in this Section B and elsewhere in this Announcement
was provided by the Vendor. The Company and the Directors have not
independently verified the accuracy and correctness of such
information herein. The sole responsibility of the Directors and
the Company for the purpose of such information has been to ensure
that such information has been accurately and correctly extracted
and reproduced in this Announcement in its proper form and
context.
1.1 Information on the Target
The Target is a private limited company incorporated in
Malaysia. Its sole shareholder is the Vendor.
The Target is primarily involved in the business of
manufacturing and distribution of proprietary biometric
system-on-card solutions ("Target Business"). Its main product
offering is a biometric central card management system known as the
Tactilis Touch, which serves as a medium of identity authentication
between human users on one hand, and devices and servers on the
other.
The prominent features of the Tactilis Touch include a sensor
capable of capturing 20-40 minutia of fingerprints, which is more
than the 5-8 minutia captured by standard fingerprint sensors. It
has the ability to drive multiple applications and contains large
memory space of up to 4 gigabytes. The Tactilis Touch is produced
by a unique proprietary molding process which enables cost
efficient manufacturing of the smart cards.
The Tactilis Touch is capable of managing multifactor identity
authentication, in the forms of fingerprints, face recognition and
iris recognition. It communicates with devices and servers by way
of smart card contact, Bluetooth, WiFi, near-field communication
(NFC) or global positioning system (GPS). The Tactilis Touch is
also a medium with multiple applications, and supports remote
updates, real-time administration and secure data backup. It
enables end-to-end security which mitigates data manipulation, with
secure data encryption throughout the system and requires biometric
verification to activate applications. Its user-friendliness and
low costs lie in its advantage that a single card may be used for
multiple applications and no infrastructure is required for users'
enrollment.
The Target's authentication and identity management services
leverage a disruptive yet simple and user-friendly end-to-end
infrastructure. The solutions offered by the Target enable its
corporate clients to mitigate risks of identity fraud and theft,
while enabling private individuals to manage and protect their
personal data and identity.
Please refer to Appendix A of this Announcement for a summary of
the key financial information of the Target for the last three (3)
financial years ended 31 December.
1.2 Information on the Vendor
The Vendor is a company incorporated in Singapore.
The Vendor is owned by 53 shareholders consisting of individuals
and corporate shareholders. Its largest shareholder is Trufinger
Management Limited ("Trufinger"), which holds approximately 29.0%
shareholding interest in the Vendor. The shareholders of Trufinger
are Mr. Michael Dean Gardiner and Mr. David William Martin, who are
nationals of the United States and New Zealand, respectively.
Mr. Michael Gardiner is the founder and chief executive officer
of the Target who spearheads the Target Business. He is an
entrepreneur with strong track record in founding and developing
international companies in the area of microelectronics. His
successful business ventures in the past include Advanced Component
Labs (in Hong Kong and the United States) as well as High Gain
Company (in Hong Kong).
Mr. David Martin is the Senior Vice President of Finance in the
Target. He has over 30 years of experience in finance in Asia and
the Middle East, supporting growth of companies through mergers,
acquisitions and restructurings. He was previously a chief
financial officer of Jardine Matheson Group for 14 years.
Further details of the Target and the Vendor will be included in
the circular to be despatched to the Shareholders in due
course.
2. KEY TERMS OF THE PROPOSED ACQUISITION
The salient terms of the SPA are set out as follows:
2.1 Proposed Acquisition
(a) The Vendor shall sell to the Company, and the Company shall
acquire from the Vendor, all of the ordinary shares in the share
capital of the Target ("Target Shares") held by the Vendor ("Target
Sale Shares") free and clear of all encumbrances and together with
all rights, title and interest attaching thereto (including the
right to receive all dividends and other distributions declared,
paid or made thereon or thereafter) on the Completion Date (as
defined hereinafter).
The Target Sale Shares, together with any Target Conversion
Shares (as defined hereinafter), and such other new Target Shares
as may be issued by the Target, shall constitute the entire issued
and paid-up share capital of the Target on the Completion Date.
(b) Target Convertible Notes
(i) Target Convertible Notes
The Company shall, and the Vendor shall procure that the Target,
simultaneously with the entry of the SPA, enters into the Target
Convertible Notes Subscription Agreement in respect of the
Company's subscription of the Initial Target Convertible Notes with
a principal amount of US$2,000,000.
The Initial Target Convertible Notes may be convertible fully
into new Target Shares ("Target Conversion Shares"), representing a
shareholding interest of 2.0% of the issued and paid-up share
capital of the Target (on a fully diluted basis) ("Target Share
Capital").
Subject to the terms and conditions of the SPA and the Target
Convertible Notes Subscription Agreement, the Company shall have
the option to convert all (and not part of) the prevailing
outstanding principal amount of the Target Convertible Notes within
two (2) years from the First Closing Date (as defined hereinafter).
The Target Convertible Notes will be automatically converted into
Target Conversion Shares upon the Company's receipt of the approval
from the Shareholders in relation to the Proposed Acquisition
("Automatic Conversion Event").
The Target Convertible Notes shall have a validity period of two
(2) years from the First Closing Date ("Notes Maturity Date").
(ii) Additional Target Convertible Notes
The Company shall have the option, exercisable at its sole
discretion, to subscribe for Additional Target Convertible Notes
for an aggregate principal amount of up to US$8,000,000
("Additional Fund Injection") at any time during the Option Period
(as defined hereinafter) ("Option"), which shall be convertible
fully into additional Target Conversion Shares ("Additional Target
Conversion Shares") representing a shareholding interest of up to
8.0% (on a pro-rata basis based on the number of Additional Target
Convertible Notes subscribed) in the Target Share Capital. The
Additional Target Convertible Notes are subject to the Automatic
Conversion Event and can also be converted prior to the Notes
Maturity Date, subject to applicable terms and conditions.
"Option Period" means a period commencing from (and including)
the closing date of the first tranche of the Initial Target
Convertible Notes ("First Closing Date") until the earlier of (and
including) (i) the Notes Maturity Date; or (ii) the completion of
the Proposed Acquisition, or such other period as may be agreed in
writing by the Company and Target.
Further information relating to the Target Convertible Notes are
set out in Section C of this Announcement.
2.2 Consideration
(a) Total Valuation
The total valuation for the entire issued and paid-up share
capital of the Target shall be US$200,000,000 ("Total Valuation"),
such amount to be determined and verified based on a valuation
report to be issued by the independent professional valuer.
(b) The Initial Fund Injection for 2.0% of the Target Share Capital
An amount of US$2,000,000 provided by the Company to the Target
by way of subscription of the Initial Target Convertible Notes will
be convertible into such number of Target Conversion Shares
representing 2.0% of the Target Share Capital.
(c) Consideration payable
The consideration of the Proposed Acquisition comprises:
(1) Initial Fund Injection by the Company amounting to
US$2,000,000 for the subscription of the Initial Target Convertible
Notes; and
(2) Consideration for the Target Sale Shares ("Consideration"),
payable in the following manner:
(i) Scenario 1: If the Option is not exercised by the Company
If the Option is not exercised by the Company, the Consideration
for the Target Sale Shares (representing 98.0% of the Target Share
Capital), calculated based on the Total Valuation, shall be
US$196,000,000, to be satisfied in full by way of allotment and
issue of 1,796,666,666 new ordinary shares in the share capital of
the Company ("Consideration Shares") at the issue price of S$0.15
per Consideration Share ("Issue Price") (on a pre-consolidation
basis before the Proposed Share Consolidation (as defined
hereinafter)), to the Vendor.
(ii) Scenario 2: If the Option is exercised by the Company
(A) Every Additional Target Convertible Notes with a principal
amount of US$1,000,000 will be convertible into such number of
Additional Target Conversion Shares representing 1.0% of the Target
Share Capital. A full conversion of the Additional Target
Convertible Notes with an aggregate principal amount of up to
US$8,000,000 will be convertible into such number of Additional
Target Conversion Shares representing 8.0% of the Target Share
Capital.
(B) The Consideration for the Target Sale Shares (representing
90.0% (or more, on a pro-rata basis subject to the amount of
Additional Target Convertible Notes subscribed) of the Target Share
Capital), calculated based on the Total Valuation, shall be an
amount of US$180,000,000 (or more, on a pro-rata basis subject to
the amount of the Additional Target Convertible Notes subscribed),
to be satisfied in full and paid to the Vendor on Completion by way
of allotment and issue of 1,650,000,000 (or more, on a pro-rata
basis subject to the amount of the Additional Target Convertible
Notes subscribed) Consideration Shares at the Issue Price per
Consideration Share (on a pre-consolidation basis before the
Proposed Share Consolidation), to the Vendor.
In view of the above, the consideration for the entire Target
Share Capital will be between US$190,000,000 and US$198,000,000, to
be satisfied by way of (i) cash, in the amount between US$2,000,000
and US$10,000,000; and (ii) Consideration Shares, in such number
between 1,650,000,000 Consideration Shares and 1,796,666,666
Consideration Shares at S$0.15 each. The cash consideration shall
be satisfied by way of (i) subscription of the Initial Target
Convertible Notes of US$2,000,000, which are convertible into 2.0%
of the Target Share Capital; and (ii) exercising the Option to
subscribe for Additional Target Convertible Notes of up to
US$8,000,000, which are convertible into up to 8.0% of the Target
Share Capital. The shares consideration shall be satisfied by way
of allotment and issue of Conversion Shares of such number between
1,650,000,000 Consideration Shares (representing 90.0% of the
Target Share Capital (if the Option is exercised)) and
1,796,666,666 Consideration Shares (representing 98.0% of the
Target Share Capital (if the Option is not exercised)).
For the purposes of computation of the Consideration, the agreed
exchange rate shall be US$1.00: S$1.375, unless otherwise agreed in
writing between the Parties.
(d) The consideration for the entire Target Share Capital was
arrived at on a willing-buyer and willing-seller basis, taking into
account, inter alia, the following:
(i) the Target being valued at US$200,000,000;
(ii) the business prospects of the Target, the potential
increase in the global demand for high-security biometric central
card management system and the potential benefits arising from the
Proposed Acquisition as discussed in Paragraph 3, Section B of this
Announcement;
(iii) the Initial Target Convertible Notes which shall be
automatically converted into 2.0% of the issued share capital of
the Target upon the occurrence of the Automatic Conversion Event
(as more particularly set out in Paragraphs 2.1(b)(i) and 2.2(b) in
this Section B and paragraph 1.1 in Section C of this
Announcement); and
(iv) if the Option is exercised, the Consideration shall be
reduced proportionately depending on the percentage of the Target
Share Capital into which the Additional Target Convertible Notes
are converted (as more particularly set out in Paragraphs
2.1(b)(ii) and 2.2(c), Section B of this Announcement).
(e) In the event that the Proposed Share Consolidation takes
place on or before Completion, the number of Consideration Shares
and the Issue Price shall be adjusted accordingly based on the
consolidation ratio to be agreed between the Company and the
Vendor.
2.3 Independent Valuation
The Company will be commissioning an independent professional
valuer to value the Target. Notwithstanding the above, if the total
valuation of the Target as indicated in the valuation report of the
independent professional valuer is lower than the Total Valuation
by more than 15.0% of the Total Valuation, the Company and the
Vendor shall negotiate and agree on the necessary adjustments,
including the Total Valuation, the Consideration and the Issue
Price. There shall not be any upward adjustment in the event that
the valuation report indicates a higher valuation than the Total
Valuation.
2.4 Additional Consideration
(a) In the event that the Target achieves at least US$25,000,000
in net profit before net interest expenses, tax, depreciation and
amortization (which excludes share of results of joint ventures,
material gains or losses which are of capital nature or
non-operational related, acquisition related costs and non-cash
gain on re-measurement of contingent consideration payable)
("EBITDA Target") based on its audited consolidated financial
statements for the financial year ending 31 December 2019
("FY2019") ("FY2019 Account"), the Company shall pay to the Vendor
such additional consideration which shall not be more than
US$50,000,000 ("Additional Consideration') in new Shares
("Additional Consideration Shares"), based on, inter alia, on the
following bases:
(i) For every US$1,000,000 in excess of the EBITDA Target, the
Company shall pay an Additional Consideration of US$5,000,000. The
Additional Consideration payable by the Company may be calculated
based on the following formula:
Additional Consideration (US$) = (Actual EBITDA Target for
FY2019 - US$25,000,000) x 5
(ii) The aggregate amount of Additional Consideration shall in
any case not exceed US$50,000,000. No Additional Consideration will
be payable if the EBITDA Target for FY2019 exceeds
US$35,000,000.
(iii) In the event the EBITDA Target achieved by the Target is
less than US$25,000,000, no clawback or repayment of Consideration
from the Vendor to the Company shall be required.
(b) In the event that Additional Consideration Shares are issued
in satisfaction of the Additional Consideration, the issue price of
each new Additional Consideration Share shall be equal to the
consolidated Issue Price (adjusted accordingly following the
Proposed Share Consolidation) of each Consideration Share allotted
and issued on Completion in satisfaction of the Consideration.
2.5 Conditions Precedent
Completion of the Proposed Acquisition ("Completion", and the
date on which such Completion occurs, the "Completion Date") is
conditional on the fulfilment (or waiver, as the case may be) of
certain terms common to transactions of such nature, including,
inter alia, the following conditions precedent ("Conditions
Precedent"):
(a) Satisfactory due diligence by the Company on the Target
The outcome of the due diligence carried out by the Company into
the financial, legal, contractual, tax, business and prospects of
the Target being reasonably satisfactory to the Company, including
without limitation, that the valuation of the Target by the
Independent Valuer is not less than the Total Valuation, provided
that the Company shall not deem the outcome of such due diligence
unsatisfactory without reasonable cause and without first giving
the Vendor a period of at least ten (10) business days to remedy
any default in respect thereof.
(b) Satisfactory due diligence by the Vendor on the Company
The outcome of the due diligence carried out by the Vendor into
the financial, legal, contractual, tax and business of the Company
being reasonably satisfactory to the Vendor, including without
limitation, the Minimum Cash Requirements (as defined hereinafter),
provided that the Vendor shall not deem the outcome of such due
diligence unsatisfactory without reasonable cause and without first
giving the Company a period of at least 10 business days to remedy
any default in respect thereof.
"Minimum Cash Requirements" means the available cash of the
Company, which shall be at least S$5,000,000 as at Completion, such
amount includes: (i) an amount representing 50.0% of the
transactional costs paid by the Company relating to the Proposed
Acquisition and the related transactions contemplated in the SPA
("Transactional Costs") paid by the Company; and (ii) any
subscription amount paid by the Company for the subscription of the
Target Convertible Notes which are not raised by the Company from
the issuance of new Shares or convertible securities of the
Company.
(c) Board's and Shareholders' Approval
The approvals of the Board and the Shareholders having been
obtained by the Company for the entry into, implementation and
completion of, the transactions contemplated under the SPA and all
other transactions in connection therewith and incidental thereto,
including the Proposed Share Consolidation, the Compliance
Placement (as defined hereinafter), the Whitewash Waiver (as
defined hereinafter) and it not having been revoked prior to
Completion Date.
(d) Vendor's board and shareholders' approval
The approvals of the board of directors and shareholders of the
Vendor having been obtained for the entry into, implementation and
completion of, the transactions contemplated under the SPA and all
other transactions in connection therewith and incidental
thereto.
(e) Regulatory Approval
All necessary consents, approvals, confirmations and waivers of
all relevant government bodies, stock exchange and other regulatory
authorities having jurisdictions or authority over the Proposed
Acquisition and all transactions contemplated under the SPA,
including but not limited to the SGX-ST, the Monetary Authority of
Singapore, the Securities Industry Council, or such other Singapore
or Malaysia regulatory authorities or governmental agencies or
departments, having been obtained by the Vendor and/or the Company,
as the case may be.
(f) No Prescribed Occurrences and Illegality
No prescribed occurrences as set out in Appendix B of this
Announcement ("Prescribed Occurrences") having occurred in relation
to the Vendor, the Target or the Company, other than as required or
contemplated under the SPA between the date of the SPA and the
Completion Date (both dates inclusive), and no relevant authority
taking, instituting, implementing or threatening to take, institute
or implement any action, proceeding, suit, investigation, inquiry
or reference or having made, proposed or enacted any statute,
regulation, decision, ruling, statement or order or taken any
steps, and there not continuing to be in effect or outstanding any
statute, regulation, decision, ruling, statement or order which
would or might:
(i) make any transaction contemplated in the SPA and all other
transactions in connection therewith and incidental thereto, void,
illegal and/or unenforceable or otherwise restrict, restrain,
prohibit or otherwise frustrate or be adverse to the same;
(ii) render the Company unable to purchase all or any of the
Target Sale Shares in the manner set out in the SPA;
(iii) render the Vendor unable to dispose all or any of their
Target Sale Shares in the manner set out in the SPA; and/or
(iv) render the Target unable or potentially unable to implement
or undertake the Target Business.
(g) No Material Adverse Change
There not having been at any time after the entry into the SPA,
any material adverse change, or events, acts or omissions likely to
lead to such a change, in the business, assets, prospects,
performance, financial position or results of operations of the
Target and the Company.
(h) Representations, Undertakings and Warranties
All representations, undertakings and warranties of the Vendor
and the Company under the SPA being complied with, and being true,
complete, accurate and correct in all material respects.
(i) Other Third Party Consents
All necessary (if any) approvals and consents from any other
parties or such other stakeholders as may be relevant) in respect
of the transactions contemplated in the SPA and all other
transactions in connection therewith and incidental thereto,
including in particular the Proposed Acquisition, having been
obtained and such approvals and consents not having been withdrawn,
suspended, amended or revoked on or before the Completion Date, and
to the extent that such approvals and consents are subject to
conditions required to be fulfilled before the Completion Date, all
such conditions having been duly so fulfilled.
(j) Completion of the Proposed Share Consolidation
If required for the purposes of meeting any requirements under
the Listing Manual, the Company shall seek the approval of the
Shareholders to undertake a share consolidation exercise, at a
consolidation ratio as may be agreed between the Company and the
Vendor ("Proposed Share Consolidation"), which shall take effect on
or before the Completion Date.
(k) Listing Status of the Company
The Company shall remain listed on the Mainboard of the SGX-ST
at Completion Date.
2.6 Completion
Subject to all the Conditions Precedent being satisfied,
fulfilled or waived, as the case may be, the Completion Date shall
be the date falling no more than ten (10) business days after the
satisfaction of the last Condition Precedent (or such other date as
the Company and the Vendor may agree in writing). In any event, the
Completion Date shall not be later than the Long-Stop Date (as
defined hereinafter).
2.7 Long-Stop Date
The long-stop date for the Proposed Acquisition shall be a date
falling twelve (12) months from the date of the SPA (or such other
date as may be agreed between the Company and the Vendor in
writing). ("Long-Stop Date"). The SPA shall terminate automatically
if any of the Conditions Precedent has not been fulfilled or
waived, as the case may be, by such Long-Stop Date.
2.8 Other Salient Terms of the SPA
(a) Target Convertible Notes
Please refer to Section C of this Announcement for the agreed
salient terms relating to the subscription of the Target
Convertible Notes.
(b) Consultant Shares
The Company will allot and issue such number of new Shares
("Consultant Shares") at the Issue Price for each Consultant Share
representing 4.0% of the Total Valuation (subject to any adjustment
according to Paragraph 2.3 above) to its consultant on Completion
as consideration for the consultant providing consultancy services
to the Company necessary or in connection with the Proposed
Acquisition.
(c) Compliance Placement
Upon Completion, in the event the Company is unable to meet the
minimum distribution and public float requirements under Rule
210(1)(a) and Rule 1015(3)(b) of the Listing Manual, or if it
becomes necessary or required under the Listing Manual, the Company
shall carry out a compliance placement ("Compliance Placement")
within one (1) month from the Completion Date, or such longer
period of time as may be permitted by the SGX-ST.
(d) Permitted Purchaser Share Allotments
Other than Permitted Purchaser Share Allotments (as defined
hereinafter) and as contemplated under the SPA, the Company shall
not issue or enter into any agreement or arrangement for the issue
of any new Shares or new consolidated Shares, options, or
securities convertible into new Shares or new consolidated Shares,
as the case may be.
"Permitted Purchaser Share Allotments" means the following
allotment and issue of new Shares or dealing with treasury shares
by the Company, where applicable:
(i) transfer of treasury shares of the Company to its employees,
directors or other persons pursuant to any share scheme of the
Company;
(ii) any dealing of the treasury shares by the Company as
permitted under Section 76K(1C) of the Companies Act;
(iii) any allotment of new Shares pursuant to the Global Invacom
Performance Share Plan 2013 and Global Invacom Share Option Scheme
2013 (both as described under the Company's annual report 2017);
or
(iv) any allotment and issue of new Shares with the prior written consent of the Vendor.
(e) Change of Name of the Company
The Company undertakes to do all that is necessary or desirable
to obtain the approval of its Shareholders, and the Accounting and
Corporate Regulatory Authority of Singapore, if applicable, for the
change of the name of the Company to such name as may be decided by
the Vendor and notified to the Company in writing prior to
Completion.
2.9 Whitewash Waiver
As the Vendor will own more than 30.0% of the enlarged share
capital of the Company upon Completion, the Vendor will be
required, under Rule 14 of the Singapore Code on Take-overs and
Mergers ("Code"), to make a general offer for the remaining Shares
not owned or controlled by the Vendor and/or its concert parties
(if any) except where the Securities Industry Council grants them a
waiver of their obligation to make a general offer under Rule 14 of
the Code ("Whitewash Waiver").
It is a condition precedent of the Proposed Acquisition that the
Securities Industry Council grants the Vendor and its concert
parties, and does not revoke any such grant, a waiver of their
obligation to make a general offer under Rule 14 of the Code for
all Shares not already owned or controlled by them, and that the
Shareholders approve a resolution for the waiver of their right to
receive such a general offer from the Vendor and its concert
parties at the extraordinary general meeting to be convened.
2.10 Moratorium
The Vendor undertakes to comply with, or procure compliance
with, all applicable moratorium requirements as may be imposed on
the Consideration Shares in accordance with (i) the Listing Manual;
and (ii) any requirements imposed by the Financial Advisor and/or
SGX-ST.
2.11 Break Fee
If either the Company or the Vendor ("Breaking-up Party")
terminates the SPA for any reason whatsoever other than those set
out in the SPA, or inform the other party or through their actions,
inactions, delays or omissions, caused the transaction not to be
consummated in accordance with the SPA, the Breaking-up Party shall
pay to the other party ("Non Breaking-up Party") an amount
equivalent to the aggregate of (i) US$20,000,000 ("Break Fee"); and
(ii) 100% of the Transactional Costs incurred up to the date of
termination of the SPA.
In the event the Vendor is the Breaking-up Party, the Vendor
shall procure the Target to redeem the Target Convertible Notes
immediately upon such termination by the Vendor, together with the
full payment of all Interest accrued, notwithstanding any terms of
the Target Convertible Notes Subscription Agreement in the contrary
(if any).
3. RATIONALE FOR THE PROPOSED ACQUISITION
The Company was placed on the Watch-List of the SGX-ST pursuant
to Rule 1311 of the Listing Manual with effect from 5 June 2018
after recording a volume-weighted average price of less than S$0.20
and an average daily market capitalisation of less than S$40
million over the then last six (6) months. The Company was required
to meet the requirements of Rule 1314 of the Listing Manual within
36 months from 5 June 2018, failing which, the SGX-ST would either
remove the Company from the Official List of the SGX-ST or suspend
trading of the listed securities of the Company with a view to
removing the Company from the Official List of the SGX-ST.
The Company is proposing to undertake the Proposed Acquisition,
together with the Proposed Target Convertible Notes Subscription,
and the Proposed RCN Issuance, pursuant to which the Target will be
injected into the Company to meet the requirements under Rule 1314
of the Listing Manual to support the Company's application to exit
from the SGX-ST's Watch-List.
The Board is also of the view that the Proposed Acquisition is
in the best interests of the Company as it provides the Company
with an opportunity to acquire an asset with a huge upside
potential. The Proposed Acquisition is expected to give the Company
a new lease of life and support the Company's application to the
SGX-ST for its removal from the SGX-ST's Watch-List.
The Proposed Acquisition, if undertaken and completed, will have
the potential to increase the market capitalisation of the Company,
which will potentially widen its investor base and lead to an
overall improvement in investors' interest and trading.
However, Shareholders should note that there is no certainty or
assurance that the SGX-ST will grant the Company approval on its
application to exit from the SGX-ST Watch-List and to remove the
Company from the Watch-List pursuant to the Proposed
Acquisition.
4. SOURCES OF FUNDS FOR PROPOSED ACQUISITION
The Company intends to satisfy the Consideration in the manner
set out in Paragraph 2.2, Section B of this Announcement, by way
of:
(a) the allotment and issuance of the Consideration Shares; and
(b) the Initial Fund Injection and/or Additional Fund Injection (as the case may be).
The Company intends to satisfy the Initial Fund Injection and
Additional Fund Injection (as the case may be) by using its
internally generated funds, funds raised from the Proposed RCN
Issuance, other external sources or a combination of any of these
sources.
5. SHARE CONSOLIDATION
In conjunction with the Proposed Acquisition, the Company
proposes to undertake a share consolidation exercise before
Completion at a consolidation ratio deemed fit by the Company and
the Vendor. The purpose of the Proposed Share Consolidation is to
allow the Company to comply with the requirement of the Listing
Manual for a minimum issue price of S$0.50 under Rule 1015(3)(d) of
the Listing Manual.
6. LISTING ON AIM
Barring any unforeseen circumstances, the Company intends for
the Shares to remain listed on the AIM Market of the London Stock
Exchange ("AIM") upon completion of the Proposed Acquisition. In
this regard, the Company is required to re-apply for the admission
of Shares for trading on AIM and to obtain the approval of more
than 50% of the Shareholders present and voting in a general
meeting of the Company.
The Company's shares will remain suspended from trading on the
AIM until such time when the Company publishes an admission
document or confirms that the Proposed Acquisition is not
proceeding.
7. RELATIVE FIGURES UNDER RULE 1006 OF THE LISTING MANUAL IN
RELATION TO THE PROPOSED ACQUISITION
The Proposed Acquisition is governed by the rules in Chapter 10
of the Listing Manual. Based on the latest announced consolidated
financial statements of the Group for the financial period ended 30
June 2018 ("FP2018") and the unaudited financial statements of the
Target for the financial period ended 30 June 2018, the relative
figures of the Proposed Acquisition computed on the bases set out
in Rules 1006(b) to (d) of the Listing Manual are as follows:
Assuming Assuming
Option is Option is
not exercised exercised
(a) Net asset value of the assets to be disposed Not applicable Not applicable
of, compared with the group's net asset value. for the Proposed for the Proposed
Acquisition Acquisition
(b) Net profits(i) attributable to the assets Not meaningful Not meaningful
acquired, compared with the Group's net profits.
(c) Aggregate value of the consideration
given, compared with the Company's market
capitalisation(ii) based on the total number
of issued shares excluding treasury shares. 2,860.3% 2,673.0%
(d) The number of equity securities issued
by the Company as consideration for the Proposed
Acquisition compared with the number of equity
securities previously in issue(iii) . 661.4% 607.4%
(e) The aggregate volume or amount of proved Not applicable Not applicable
and probable reserves to be disposed of, for the Proposed for the Proposed
compared with the aggregate of the Group's Acquisition Acquisition
proved and probable reserves. This basis
is applicable to a disposal of mineral, oil
or gas assets by a mineral, oil and gas company,
but not to an acquisition of such assets.
Notes:
(i) Under Rule 1002(3)(b) of the Listing Manual, "net profits"
is defined as profit or loss before income tax, minority interests
and extraordinary items.
The Target made a net loss of approximately US$1.9 million or
approximately S$2.5 million (based on an exchange rate of 1.3268,
being the average exchange rate of Singapore Dollars to United
States Dollars for FP2018) for FP2018. The Group made a net profit
of approximately US$0.5 million or approximately S$0.7 million for
FP2018.
(ii) Under Rule 1002(5), "market capitalisation" is determined
by multiplying the number of shares in issue by the weighted
average price of such shares transacted on the market day preceding
the date of the SPA.
Accordingly, the market capitalisation of the Company is based
on 271,662,227 Shares in issue (excluding treasury shares) and the
weighted average price of S$0.065 of the Shares transacted on 15
October 2018, being the last market date preceding the date of the
SPA that the Shares were traded. The market capitalisation of the
Company for the purposes of the Proposed Acquisition is
approximately S$17.7 million.
(iii) This figure was computed based on the 1,796,666,666 Consideration Shares and 1,650,000,000 Consideration Shares (on a pre-consolidation basis before the Proposed Share Consolidation) to be issued based on the assumption that the Option is not exercised and if the Option is exercised, respectively, and 271,662,227 Shares in the issued and paid-up capital of the Company as at 30 June 2018.
As the relative figures under Rules 1006(c) and 1006(d) of the
Listing Manual exceed 100%, the Proposed Acquisition constitutes a
"Very Substantial Acquisition" or "Reverse Takeover" as defined in
Rule 1015 of the Listing Manual. Accordingly, the Proposed
Acquisition shall be conditional upon, inter alia, the approval of
the Shareholders and the approval of the SGX-ST being obtained
pursuant to Rule 1015 of the Listing Manual.
8. PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION
The financial information relating to the Target used for
illustrating the financial effects of the Proposed Acquisition as
set out under this paragraph was provided by the Vendor.
The pro forma financial effects of the Proposed Acquisition on
the net tangible assets ("NTA") per Share and earnings per Share
("EPS") are for illustrative purposes only and are not necessarily
indicative of the results of operations or financial position of
the Group that would have been attained had the Proposed
Acquisition been completed at an earlier date.
The financial effects of the Proposed Acquisition are prepared
based on the audited consolidated financial statements of the Group
for FY2017, the audited financial statements of the Target for
FY2017 and the following assumptions:
(a) the financial effects on the Company's earnings and earnings
per share are computed assuming the Proposed Acquisition was
completed at the beginning of the financial year;
(b) the financial effects on the Company's NTA are computed
assuming the Proposed Acquisition was completed at the end of the
financial year;
(c) the Consideration Shares were issued at the Issue Price on 1
January 2017 for EPS computation and on 31 December 2017 for NTA
computation;
(d) assuming that 1,796,666,666 Consideration Shares and
1,650,000,000 Consideration Shares based on the assumption that the
Option is not exercised and the Option is exercised, respectively
(on a pre-consolidation basis), will be issued to the Vendor at an
issue price of S$0.15 per Consideration Share;
(e) the analysis does not take into account the transactional
costs and expenses which are related to the Proposed Acquisition
and the related transactions as contemplated under the SPA;
(f) the analysis does not take into account any dividend and
distributions out of profits that may be declared by the Target in
respect of the financial year ended 31 December 2017;
(g) the computations do not take into account the issuance of
the Compliance Placement Shares and the Additional Consideration
Shares (as it is not possible to quantify in any meaningful way the
total amount of new Shares to be issued pursuant to the Compliance
Placement and as payment for the Additional Consideration Shares,
as of the date of this Announcement); and
(h) the computations do not take into account the issuance of
RCN Conversion Shares (as defined hereinafter) arising from the
Proposed RCN Issuance.
8.1 Net Tangible Assets ("NTA")
Before Proposed Immediately after Immediately after
Acquisition Proposed Acquisition Proposed Acquisition
(Assuming Option (Assuming Option
is not exercised) is exercised
in full)
-------------------- ---------------- ---------------------- ----------------------
NTA as at
31 December
2017 (US$) 43,946,000 239,580,184 233,946,000
Number of
Shares (excluding
treasury shares) 271,662,227 2,141,662,226 1,994,995,560
NTA per share
(US$ cents) 16.2 11.2 11.7
Notes:
(i) NTA is computed based on total assets less total liabilities
(excluding goodwill and intangible assets)
(ii) The NTA per share is calculated based on a
pre-consolidation basis
8.2 Earnings per Share ("EPS")
Before Proposed Immediately after Immediately after
Acquisition Proposed Acquisition Proposed Acquisition
(Assuming Option (Assuming Option
is not exercised) is exercised
in full)
------------------- ---------------- ---------------------- ----------------------
Net profit
of the Group
for FY2017
(US$) 2,949,000 588,949 588,949
Weighted average
number of
Shares excluding
(treasury
shares) 271,662,227 2,141,662,226 1,994,995,560
Earnings per
Share (US$
cents) 1.1 0.03 0.03
9. EXTRAORDINARY GENERAL MEETING
A circular containing, inter alia, details of the Proposed
Acquisition and such other transactions in connection with and/or
incidental to the Proposed Acquisition, together with the notice of
extraordinary general meeting, will be despatched to the
Shareholders in due course.
C. PROPOSED TARGET CONVERTIBLE NOTES SUBSCRIPTION
1. KEY TERMS OF THE PROPOSED TARGET CONVERTIBLE NOTES SUBSCRIPTION
The salient terms of the Target Convertible Notes Subscription
Agreement are as follows:
1.1 Initial Funds Injection
The Company shall subscribe for the Initial Target Convertible
Notes for a principal amount of US$2,000,000 in two (2) equal
tranches, comprising tranche 1 and tranche 2 of the Initial Target
Convertible Notes.
The Initial Target Convertible Notes shall be convertible fully
into Target Conversion Shares, representing a shareholding interest
of 2.0% of the Target Share Capital on the date of the full
conversion.
1.2 Options for Additional Target Convertible Notes
The Target has granted an Option to the Company, exercisable at
the discretion of the Company, at any time and from time to time
during the Option Period, by delivering (the date of such delivery,
the "Option Exercise Date") to the Company the exercise notice(s)
for the subscription of Additional Target Convertible Notes,
provided, inter alia, that:
(a) each exercise of Option shall be for a minimum amount of US$1,000,000;
(b) the aggregate principal amount of the Additional Target
Convertible Notes subscribed pursuant to the exercise of Option
shall not be more than US$8,000,000; and
(c) the exercise notice shall be accompanied by the relevant
subscription monies (after deducting the relevant cost and
expenses).
1.3 Interest
The Target Convertible Notes shall entitle the Company to 5.0%
interest per annum ("Interest") on its total principal amount, with
each successive interest period of one (1) year ending on 31
December of each year ("Interest Period"), provided that the first
Interest Period shall commence from (and including) the First
Closing Date and end on (and including) 31 December of the same
year, unless otherwise agreed by the Company and the Target. Each
subsequent Interest Period shall commence from (and including) 1
January and end on (and including) 31 December of the same
year.
The Interest shall be adjusted to 10.0% per annum immediately
with effect from the First Closing Date on a retrospective basis
until the full payment of the Interest accrued, in the event of
termination or abortion of the Proposed Acquisition, due to
termination of this Agreement or otherwise.
1.4 Maturity
The Target Convertible Notes shall have a validity period of two
(2) years from the First Closing Date.
1.5 Conversion
(a) Early Conversion
The Company shall have the option to convert all (and not part
of) the prevailing outstanding principal amount of the Target
Convertible Notes into Target Conversion Shares, on or before the
Notes Maturity Date.
(b) Automatic Conversion
On the date of the Company's receipt of the Shareholders'
approval in relation to the Proposed Acquisition, all (and not part
of) the prevailing outstanding principal amount of the Target
Convertible Notes shall be automatically converted into new Target
Conversion Shares.
(c) Conversion mechanism
The Initial Target Convertible Notes shall be convertible fully
into such number of Target Conversion Shares representing a
shareholding interest of 2.0% of the Target Share Capital.
In the event the Option is exercised by the Company pursuant to
which Additional Target Convertible Notes are subscribed for, the
Additional Target Convertible Notes shall be convertible into such
number of Target Conversion Shares representing a shareholding
interest of up to 8.0% of the Target Share Capital (depending on
the total amount of the Additional Target Convertible Notes
subscribed by the Company).
1.6 Redemption
(a) Redemption upon Maturity
The Target Convertible Notes not converted or cancelled by the
Target upon the Notes Maturity Date shall be redeemed by the Target
at 100% of their principal amount on the Notes Maturity Date,
together with the payment of all Interest (computed in the manner
set out in Paragraph 1.3, Section C of this Announcement).
(b) Compulsory Redemption
The Target Convertible Notes not converted or cancelled by the
Target shall be redeemed by the Target within three (3) months from
the termination of the Proposed Acquisition due to any reason
whatsoever at 100% of their principal amount, together with the
payment all Interest (computed in the manner set out in Paragraph
1.3 above).
2. SECURITY
As security for the Company on the due performance of the Target
under the Target Convertible Notes Subscription Agreement, the
Company has on 23 October 2018 entered into a share charge
agreement ("Share Charge") with the Vendor pursuant to which a
first ranking fixed legal charge over such number of Target Sale
Shares representing 10.0% of the Target Share Capital shall be
created by Vendor in favour of the Company.
The Vendor further agrees that it shall create in favour of the
Company, a first ranking fixed legal charge over such number of
additional Target Sale Shares representing an additional
shareholding interest of 10.0% of the Target Share Capital within
fourteen (14) days from the date of a written request by the
Company, provided that such request shall only be issued by the
Company in the event that the total subscription monies paid by the
Company for the subscription of the Target Convertible Notes
exceeds US$5,000,000 in aggregate.
3. RATIONALE FOR THE PROPOSED TARGET CONVERTIBLE NOTES SUSBCRIPTION
The Initial Fund Injection and/or the Additional Fund Injection
(as the case may be) to be provided by the Company to the Target
pursuant to the subscription of the Target Convertible Notes will
be utilised by the Target to fulfill its business operation and
expansion requirements, which will, upon successful deployment,
enhance the Target's financial and business positions. Given the
Company's intention to acquire the Target as its wholly-owned
subsidiary (subject to the terms and conditions of the SPA), the
growth and advancement of the business and prospects of the Target
will be beneficial to the Company upon completion of the Proposed
Acquisition.
In addition, the subscription monies paid by the Company
pursuant thereto will permit the Company to acquire a shareholding
interest of up to 10.0% of the Target Share Capital at a lower cost
of acquisition. Please refer to Paragraph 2.2 of Section B of this
Announcement for further details in this regard.
In any event, the subscription monies to be paid by the Company
will carry an interest of 5.0% per annum, which may be increased to
10.0% per annum immediately with effect from the First Closing Date
on a retrospective basis until the full payment of the Interest
accrued, in the event of termination or abortion of the Proposed
Acquisition, due to termination of this Agreement or otherwise. The
Company will therefore be able to earn an interest income from the
date of funding until full conversion or redemption of the Target
Convertible Notes in the event that the Proposed Acquisition fails
to complete.
The Company's position will be further secured by the Share
Charge comprising 10% of the Target Share Capital, which may be
increased to an aggregate of 20% (in the event that the
subscription amount for the Target Convertible Notes exceeds
US$5,000,000), in the event of default by the Target of the
redemption and payment of the Interest.
Taking into account the above, the Board is therefore of the
view that the Proposed Target Convertible Notes Subscription is in
the best interest of the Company.
4. RELATIVE FIGURES UNDER RULE 1006 OF THE LISTING MANUAL IN
RELATION TO THE PROPOSED TARGET CONVERTIBLE NOTES SUBSCRIPTION
The Proposed Convertible Notes Subscription is considered a
"transaction" under the rules in Chapter 10 of the Listing
Manual.
Under the Target Convertible Notes Subscription Agreement, the
Company has committed to subscribe the Initial Target Convertible
Notes for a principal amount of US$2,000,000 in two (2) equal
tranches. The Option will only be exercised by the Company if
deemed fit by the Board, taking into account, inter alia, progress
of the Proposed Acquisition and business operation and expansion of
the Target.
For the purposes of this Announcement, the computation to be set
out hereunder will be calculated based on the amount of the Initial
Fund Injection, namely US$2,000,000.
Based on the latest announced consolidated financial statements
of the Group for FP2018 and the unaudited financial statements of
the Target for the same period, the relative figures of the Initial
Fund Injection computed on the bases set out in Rules 1006(b) to
(d) of the Listing Manual are as follows:
(a) Net asset value of the assets to be disposed Not applicable
of, compared with the group's net asset value.
(b) Net profits(i) attributable to the assets Not meaningful
acquired, compared with the Group's net profits.
(c) Aggregate value of the consideration given,
compared with the Company's market capitalisation(ii)
based on the total number of issued shares excluding
treasury shares. 11.3%
(d) The number of equity securities issued by Not applicable
the Company as consideration for the Proposed
Acquisition compared with the number of equity
securities previously in issue.
(e) The aggregate volume or amount of proved Not applicable
and probable reserves to be disposed of, compared
with the aggregate of the Group's proved and
probable reserves. This basis is applicable to
a disposal of mineral, oil or gas assets by a
mineral, oil and gas company, but not to an acquisition
of such assets.
Notes:
(i) Under Rule 1002(3)(b) of the Listing Manual, "net profits"
is defined as profit or loss before income tax, minority interests
and extraordinary items.
The Target made a net loss of approximately US$1.9 million or
approximately S$2.5 million (based on an exchange rate of 1.3268,
being the average exchange rate of Singapore Dollars to United
States Dollars for FP2018) for FP2018. The Group made a net profit
of approximately US$0.5 million or approximately S$0.7 million for
FP2018.
(ii) Under Rule 1002(5), "market capitalisation" is determined
by multiplying the number of shares in issue by the weighted
average price of such shares transacted on the market day preceding
the date of the SPA.
Accordingly, the market capitalisation of the Company is based
on 271,662,227 Shares in issue (excluding treasury shares) and the
weighted average price of S$0.065 of the Shares transacted on 15
October 2018, being the last market date preceding the date of the
Target Convertible Notes Subscription Agreement that the Shares
were traded. The market capitalisation of the Company for the
purposes of the Proposed Acquisition is approximately S$17.7
million.
As the relative figures under Rules 1006(c) of the Listing
Manual exceeds 5.0% but is below 20.0%, the Initial Fund Injection
pursuant to the Proposed Target Convertible Notes Subscription
constitutes a "Disclosable Transaction" as defined under Rule 1010
of the Listing Manual.
However, as the Company is granted the Option to subscribe for
Additional Target Convertible Notes of an aggregate principal
amount of up to US$8,000,000, such subscription, if effected, may
trigger the requirement of shareholders' approval under Chapter 10
of the Listing Manual.
Accordingly, the Company will despatch a circular containing the
required details of the Additional Fund Injection pursuant to the
subscription of the Additional Target Convertible Notes,
respectively and hold an extraordinary general meeting to obtain
the shareholders' specific approval accordingly.
5. FINANCIAL EFFECTS OF THE INITIAL FUND INJECTION PURSUANT TO
THE PROPOSED TARGET CONVERTIBLE NOTES SUBSCRIPTION
The financial information relating to the Target used for
illustrating the financial effects of the Initial Fund Injection
pursuant to the Proposed Target Convertible Notes Subscription as
set out under this paragraph was provided by the Vendor.
The financial effects of the Initial Fund Injection pursuant to
the Proposed Target Convertible Notes Subscription are prepared
based on the audited consolidated financial statements of the Group
for FY2017, the audited financial statements of the Target for
FY2017 and the following assumptions:
(a) the financial effects on the Company's earnings and earnings
per share are computed assuming the Initial Fund Injection was
completed at the beginning of the financial year;
(b) the financial effects on the Company's NTA and gearing are
computed assuming the Initial Fund Injection was completed at the
end of the financial year;
(c) the analysis not taking into account the transactional costs
and expenses which are related to the Initial Fund Injection and
the transaction in relation thereto;
(d) the analysis does not take into account any dividend and
distributions out of profits that may be declared by the Target in
respect of the financial year ended 31 December 2017;
(e) the computations do not take into the account the exercise
of the Option as there is no certainty at this juncture that such
Option would eventually be exercised and/or the extent that such
Option will be exercised; and
(f) the computations do not take into account the issuance of
Shares arising from the Proposed RCN Issuance.
5.1 NTA
Before Initial Fund Immediately after Initial
Injection Fund Injection
-------------------- -------------------- --------------------------
NTA as at
31 December
2017 (US$) 43,946,000 43,946,000
Number of
Shares (excluding
treasury shares) 271,662,227 271,662,227
NTA per share
(US$ cents) 16.2 16.2
Notes:
(i) NTA is computed based on total assets less total liabilities
(excluding goodwill and intangible assets).
(ii) The NTA per share is calculate on a pre-consolidation basis.
5.2 EPS
Before Initial Fund Immediately after Initial
Injection Fund Injection
------------------- -------------------- --------------------------
Net profit
of the Group
for FY2017
(US$) 2,949,000 2,949,000
Weighted average
number of
Shares excluding
(treasury
shares) 271,662,227 271,662,227
Earnings per
Share (US$
cents) 1.1 1.1
D. PROPOSED RCN ISSUANCE
Pursuant to the RCN Subscription Agreement, the Company has
agreed to issue to the Subscribers 1.0% unsecured redeemable
structured convertible notes due 2021 (collectively, the "RCN
Notes" and each, a "RCN Note") with an aggregate principal amount
of up to S$20,000,000 in four (4) tranches (the "Proposed RCN
Issuance").
The four (4) tranches of the RCN Notes (each, a "Tranche") shall
be referred to as "Tranche 1 RCN Notes", "Tranche 2 RCN Notes",
"Tranche 3 RCN Notes" and "Tranche 4 RCN Notes", respectively. The
Tranche 1 RCN Notes and Tranche 2 RCN Notes shall comprise sixteen
(16) equal sub-tranches of S$250,000 each. The Tranche 3 RCN Notes
and Tranche 4 RCN Notes shall comprise twelve (12) equal
sub-tranches of S$500,000 each.
1. SALIENT TERMS OF THE RCN NOTES
Pursuant to the RCN Subscription Agreement, the Company, the
Subscribers and ACPAM have agreed that the issue of the RCN Notes
shall be on, inter alia, the following terms:
Subscription (a) The Subscribers will subscribe for the
Tranche 1 RCN Notes at the RCN Issue Price
(as defined hereinafter).
(b) The Company has an option to require
the Subscribers to subscribe for Tranche
2 RCN Notes to Tranche 4 RCN Notes at the
RCN Issue Price during the relevant option
period (the "RCN Option Period"). In respect
of the RCN Notes under each Tranche, the
RCN Option Period means the period from
the conversion date of the last of the RCN
Notes comprised in the last sub-tranche
of the preceding tranche to the tenth (10(th)
) business day thereafter, or such other
period as may be agreed between the Subscribers
and the Company.
Issue price In relation to each sub-tranche of the relevant
(the "RCN Issue tranche, the amount equivalent to 100% of
Price") the principal amount of the RCN Notes for
such sub-tranche.
Method of issue The RCN Notes will be privately placed to
and purchased by the Subscribers. No offering
circular or information memorandum will
be issued by the Company for the Proposed
RCN Issuance.
Interest 1.0% interest per annum, payable semi-annually
in arrears on 30 June and 31 December in
each year. Each RCN Note shall cease to
bear interest on conversion into new Shares
(the "RCN Conversion Shares") or from the
due date for redemption.
Conversion (a) Any RCN Note may be converted into RCN
Conversion Shares at the option of its holder
from the date on which it is issued up to
the close of business on the day falling
one (1) week before the RCN Maturity Date
(as defined hereinafter).
(b) The number of RCN Conversion Shares
to which a noteholder is entitled on conversion
shall be determined by dividing the aggregate
principal amount of the RCN Notes to be
converted by the applicable Conversion Price
(as defined hereinafter).
Conversion price The price at which each RCN Conversion Share
(the "Conversion shall be issued upon conversion shall be:
Price")
(a) in respect of Tranche 1 RCN Notes, 90.0%
of the daily average volume weighted average
price ("VWAP") per Share for the business
day prior to the relevant conversion date
of the RCN Notes on which Shares were traded
on the SGX-ST;
(b) in respect of the Tranche 2 RCN Notes,
80.0% of the average Closing Price per Share
on any three (3) consecutive business days
as selected by the relevant noteholder during
the 45 business days immediately preceding
the relevant conversion date on which Shares
were traded on the SGX-ST;
(c) in respect of the Tranche 3 RCN Notes,
82.0% of the average Closing Price per Share
on any three (3) consecutive business days
as selected by the relevant noteholder during
the 45 business days immediately preceding
the relevant conversion date on which Shares
were traded on the SGX-ST; and
(d) in respect of the Tranche 4 RCN Notes,
85.0% of the average Closing Price per Share
on any three (3) consecutive business days
as selected by the relevant noteholder during
the 45 business days immediately preceding
the relevant conversion date on which Shares
were traded on the SGX-ST,
provided that the Conversion Price of each
RCN Note shall not be lower than the Minimum
Conversion Price (as defined hereinafter).
Maximum Conversion The Subscriber agrees that the maximum number
Shares under of RCN Conversion Shares to be allotted
Tranche 1 RCN pursuant to conversion of the Tranche 1
Notes RCN Notes shall be 50,000,000.
Minimum Conversion The minimum conversion price for the RCN
Price Notes shall be S$0.01.
Shareholders' The Company intends to utilise the mandate
Mandate provided to the Company pursuant to the
Company's Annual General Meeting held on
25 April 2018 in regards to the offer or
sale, or invitation for subscription or
purchase, or the issue, of the Tranche 1
RCN Notes and the RCN Conversion Shares
arising therefrom upon the exercise of the
Conversion Rights by the Subscribers.
The allotment and issue of Tranche 2 Notes,
Tranche 3 Notes and Tranche 4 Notes, and
the RCN Conversion Shares arising therefrom
upon the exercise of the Conversion Rights
by the Subscribers will be subject to the
approval of the shareholders of the Company
at a general meeting.
Closing price The closing price of the Shares on the SGX-ST
of a Share (the for one (1) Share on a particular business
"Closing Price") day as adjusted pursuant to the terms and
conditions of the RCN Notes (the "Terms
and Conditions").
Closing date In respect of each sub-tranche of the RCN
("the Closing Notes, the date on which such sub-tranche
Date") of the RCN Notes is subscribed for and issued
pursuant to the RCN Subscription Agreement.
Redemption The Company may redeem the RCN Notes presented
for conversion in cash at the Redemption
Amount (as defined hereinafter) if the Conversion
Price is less than or equal to 65.0% of
the daily average VWAP per Share for the
45 consecutive business days period prior
to, in respect of the respective Closing
Dates.
Redemption amount The redemption amount is calculated according
(the "Redemption to the following formula:
Amount")
N x {P + [8.0% x P x (D/365)] + I}
Where:
"D" = the amount of days elapsed since the
relevant Closing Date.
"N" = the number of RCN Notes presented
for conversion.
"P" = the face value of the RCN Notes presented
for conversion.
"I" = the remaining unpaid interest accrued
on the RCN Notes presented for conversion.
Maturity "RCN Maturity Date" means the date falling
thirty-six (36) months from the Closing
Date of the first sub-tranche of Tranche
1 RCN Notes. The RCN Notes which are not
redeemed or purchased, converted or cancelled
by the Company will be converted by the
Company in accordance with the Terms and
Conditions on the RCN Maturity Date.
Conditions precedent The Subscribers shall not be obliged to
to the closing subscribe for the first sub-tranche of Tranche
of the first 1 RCN Notes unless the Company has satisfied
sub-tranche the conditions precedent within three (3)
of Tranche 1 calendar months from the date of the RCN
RCN Notes Subscription Agreement, which shall include
without limitation:
(a) all necessary corporate approvals relating
to the Tranche 1 RCN Notes shall have been
obtained, and such approval shall not have
been amended, withdrawn, revoked or cancelled
on or before the Closing Date of the first
sub-tranche of Tranche 1 RCN Notes;
(c) all necessary authority approvals relating
to the RCN Notes shall have been obtained
and such approval shall not have been amended,
withdrawn, revoked or cancelled on or before
the Closing Date of the first sub-tranche
of Tranche 1 RCN Notes;
(d) all necessary third party approvals
relating to the RCN Notes shall have been
obtained and such approval shall not have
been amended, withdrawn, revoked or cancelled
on or before the Closing Date of the first
sub-tranche of Tranche 1 RCN Notes;
(e) all the registration and submission
required to be carried out by the Company
for the transactions contemplated under
the RCN Subscription Agreement to any relevant
authorities shall have been duly carried
out;
(f)
(i) all the representations, warranties,
undertakings and covenants of the Company
(including the warranties) set forth in
the RCN Subscription Agreement shall be
accurate and correct in all respects; and
(ii) the Company shall have performed all
of its undertakings or obligations under
the RCN Subscription Agreement to be performed.
If any of the above conditions precedent
are not satisfied or waived by the Subscribers,
the RCN Subscription Agreement shall ipso
facto cease, and the parties shall be released
and discharged from their respective obligations,
save for costs and expenses payable in relation
to the RCN Notes and/or RCN Conversion Shares,
indemnity by the Company and any antecedent
breaches.
Conditions to The Subscribers shall not be obliged to
each of the subscribe and pay for each sub-tranche of
respective closings the RCN Notes (other than the first sub-tranche
for the remaining of Tranche 1 RCN Notes) unless the prescribed
RCN Notes conditions (including without limitation,
the following) have been satisfied:
(a) all the corporate approvals, authority
approvals and third party approvals for
the transactions contemplated under the
RCN Subscription Agreement (if not already
obtained) shall have obtained and shall
not have been amended, withdrawn, revoked
or cancelled on or prior to each subsequent
Closing Date;
(b) at each Closing Date for the first sub-tranche
of Tranche 2 RCN Notes to Tranche 4 RCN
Notes, all the representations, warranties,
undertakings and covenants of the Company
set forth in the RCN Subscription Agreement
including the warranties shall be accurate
and correct in all respects at, and as if
made on, that Closing Date; and
(c) the Company shall have performed all
of its undertakings or obligations under
the RCN Subscription Agreement to be performed
on or before that Closing Date.
On-Selling Restriction The Subscribers undertake not to directly
on-sell the Conversion Shares to the competitors
of the Company or their associates, as notified
by the Company in writing.
Fees An administration fee of 6.0% of the principal
amount of each sub-tranche of Tranche 1
RCN Notes to Tranche 4 RCN Notes issued
is payable by the Company to ACPAM and/or
AOF in such proportion as may be instructed
by ACPAM and AOF accordingly on the Closing
Date of each respective sub-tranche of RCN
Notes.
Governing Law Singapore laws
2. INFORMATION ON THE SUBSCRIBERS AND ACPAM
AOF is an open-ended fund with sub-funds incorporated in the
Cayman Islands and has its registered office at Cricket Square,
Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman
Islands.
AOF I is an open-ended fund incorporated as an exempted company
with limited liability in the Cayman Islands on 27 January 2016 and
has a registered office at P.O. Box 309, Ugland House, Grand Cayman
KY1-1104, Cayman Islands. AOF I is structured as a regulated mutual
fund with the Cayman Islands Monetary Authority. The investment
objective of AOF I is to achieve medium to long term capital
appreciation through investment in financial instruments that
assist small and medium capitalisation and publicly-listed
companies. The investment strategy of AOF I is to provide funding
solutions to companies that facilitate working capital
requirements, business expansion, mergers and acquisitions, reverse
take-overs, management by objective, debt restructuring and
arbitrage trades using a combination of debt and equity
securities.
ACF is an exempted company incorporated on 15 August 2017 and
registered as a segregated portfolio company in the Cayman Islands
and having its registered office at Maples Corporate Services
Limited, P.O. Box 309, Ugland House, Grand Cayman KY1-1104, Cayman
Islands, acting for and on behalf of Golden Fund SP (a segregated
portfolio set up under ACF).
ACPAM is a company incorporated in Singapore on 5 June 2013 and
has its registered office at 16 Collyer Quay, #29-01 Income at
Raffles, Singapore 049318. ACPAM is a registered fund management
company with the Monetary Authority of Singapore and has been
appointed by the Subscribers to serve as the discretionary
investment manager of all the investments of the Subscribers.
3. PROCEEDS
The Company intends to raise up to S$20,000,000 gross proceeds
from the issue of RCN Notes.
Up to S$14,000,000 of the gross proceeds will be utilised for
the subscription of the Target Convertible Notes. The related 6%
administrative fees of up to S$840,000 will be borne by the Target,
and therefore does not constitute costs payable by the Company.
The remaining S$6,000,000 of the gross proceeds will be utilised
for (i) the Transactional Costs of approximately S$3,000,000; and
(ii) general working capital of the Company. The related 6%
administrative fees of S$360,000 will be borne by the Company.
The net proceeds, after deducting (i) the estimated fees and
expenses related to the Proposed RCN Issuance amounting to
approximately S$80,000; and (ii) the 6% administrative fees for the
RCN Notes payable by the Company of approximately S$360,000, will
be approximately S$19,560,000 (the "Net Proceeds").
The Company intends to use the Net Proceeds in the following
manner:
Use of Net Proceeds Percentage Allocation
(%)
------------------------------------------ ----------------------
General Working Capital 13.09
Subscription of Target Convertible Notes 71.57
Transactional Costs 15.34
4. RATIONALE FOR ISSUING OF THE RCN NOTES
The Company intends to utilise the funds raised from the
issuance of the RCN Notes to subscribe for the Target Convertible
Notes, to pay for the Transactional Costs, and for the Company's
general working capital purposes.
5. APPLICATION TO THE SGX-ST AND AIM
The Company will make an application to the SGX-ST for the
listing of and quotation for the RCN Conversion Shares on the
Official List of the SGX-ST. The Company will make the necessary
announcement upon the receipt of the approval-in-principle from the
SGX-ST for the listing of and quotation for the RCN Conversion
Shares on the Official List of the SGX-ST. The RCN Notes will not
be listed on the Official List of the SGX-ST and to fulfil its
working capital requirements.
Given the Company's intention to remain listed on AIM following
completion of the Proposed Acquisition, application shall also be
made by the Company for the RCN Conversion Shares to be admitted to
trading on AIM as well.
6. MANDATE AND EXTRAORDINARY GENERAL MEETING
Subject to the approval of the SGX-ST, if required, the Company
intends to utilise the mandate provided to the Company pursuant to
the Company's Annual General Meeting held on 25 April 2018 in
regards to the offer or sale, or invitation for subscription or
purchase, or the issue, of the Tranche 1 RCN Notes and the RCN
Conversion Shares arising therefrom upon the exercise of the
Conversion Rights by the Subscribers.
Further to the above, the Company intends to seek Shareholders'
approval in relation to the subscription of the Tranche 2 RCN Notes
to Tranche 4 RCN Notes and a circular containing, inter alia, the
notice of the extraordinary general meeting and details of the
terms and conditions of the Proposed RCN Issuance will be
dispatched to the Shareholders in due course.
E. GENERAL
1. INTEREST OF THE DIRECTORS AND CONTROLLING SHAREHOLDERS
None of the Directors, other than in their respective capacity
as Directors or Shareholders of the Company, and controlling
Shareholders of the Company, has any interest, direct or indirect,
in the Proposed Acquisition, the Proposed Target Convertible Notes
Subscription and the Proposed RCN Issuance.
2. NO INTERCONDITIONALITY
The Proposed Acquisition, Proposed Target Convertible Notes
Subscription and Proposed RCN Issuance are not inter-conditional on
each other.
3. INDICATIVE SUBMISSION AND COMPLETION TIMELINE
It is expected that the necessary submission relating to the
Proposed Acquisition and such other related transactions will be
made in April 2019, pending finalisation of the audited financial
statements of the Group and the Target for the financial year
ending 31 December 2018. Subject to the satisfaction of the
conditions precedent under the SPA, including the approvals from
the SGX-ST and the Shareholders, the Company expects that the
Proposed Acquisition may be completed in the third quarter of
2019.
4. RESPONSIBILITY STATEMENT
The Directors (other than the Dissenting Directors (as defined
hereinafter)) including those who may have delegated detailed
supervision of the preparation of this Announcement) collectively
and individually accept full responsibility for the accuracy of the
information given in this Announcement (save for information
relating to the Vendor and the Target) and confirm after making all
reasonable enquiries that, to the best of their knowledge and
belief, this Announcement constitutes full and true disclosure of
all material facts about the Proposed Acquisition, the Proposed
Target Convertible Notes Subscription, the Proposed RCN Issuance,
the Company and its subsidiaries as at the date hereof, and that
they are not aware of any facts the omission of which would make
any statement in this Announcement misleading.
Where information in the Announcement has been extracted from
published or otherwise publicly available sources or obtained from
a named source, the sole responsibility of the Directors has been
to ensure, through reasonable enquiries, that such information is
accurately and correctly extracted from those sources and/or
reproduced in this Announcement in its proper form and context.
5. OTHER MATTERS
The Company will make the necessary announcements when there are
further developments on the Proposed Acquisition, the Proposed
Target Convertible Notes Subscription and the Proposed RCN
Issuance.
The Proposed Acquisition, the Proposed Target Convertible Notes
Subscription and the Proposed RCN Issuance have been approved by
the majority members of the Board, who have also approved the
release of this Announcement. The three members of the Board that
did not approve were Mr Cosimo Borrelli and Mr Basil Chan, both
Independent Directors, and Mr Kenny Sim, a Non-Independent Director
(collectively, the "Dissenting Directors").
6. DOCUMENTS FOR INSPECTION
A copy of each of the SPA, the Target Convertible Notes
Subscription Agreement, the Share Charge and the RCN Subscription
Agreement will be made available for inspection during normal
business hours at the registered office of the Company at 8 Temasek
Boulevard, #18-02A Suntec Tower Three, Singapore 038988 for a
period of three (3) months from the date of this Announcement.
7. CAUTION IN TRADING
Shareholders and potential investors are advised to exercise
caution in trading the Shares as there is no certainty or assurance
as at the date of this Announcement that the Proposed Acquisition,
Proposed Target Convertible Notes Subscription and/or Proposed RCN
Issuance will be completed.
Shareholders are advised to read this Announcement and any
further announcements by the Company carefully. Shareholders should
consult their stock brokers, bank managers, solicitors or other
professional advisers if they have any doubt about the actions that
they should take.
BY ORDER OF THE BOARD
ANTHONY BRIAN TAYLOR
EXECUTIVE CHAIRMAN
24 October 2018
APPIX A
SUMMARY OF PRO FORMA FINANCIAL STATEMENT OF THE TARGET
Summary of Pro Forma Financial Information of the Target
A summary of the audited profit and loss statement of the Target
for each of the last three (3) financial years ended 31 December
2017 ("FY2017"), 31 December 2016 ("FY2016") and 31 December 2015
("FY2015"), respectively, and a summary of the audited balance
sheet of the Target as at 31 December 2017, are set out below.
(a) Summary of Income Statement of the Target
USD <----------------------Audited---------------------->
FY2017 FY2016 FY2015
-------------------- ------------------- ---------------
Revenue 31,925 3,600 -
-------------------- ------------------- ---------------
Gross profit /
(loss) (486,832) 3,600 -
-------------------- ------------------- ---------------
Profit / (loss)
before tax (2,360,051) (1,214,411) (835,945)
-------------------- ------------------- ---------------
Profit / (loss)
after tax (2,360,051) (1,214,411) (835,945)
-------------------- ------------------- ---------------
(b) Summary of Balance Sheet of the Target
As at 31 December 2017
USD Audited
Non-current assets 1,160,576
----------
Current assets 1,636,325
----------
Non-current liabilities -
----------
Current liabilities 5,162,717
----------
Net liabilities attributable
to shareholders 2,796,901
----------
Net tangible assets attributable
to shareholders 2,796,901
----------
APPENDIX B
PRESCRIBED OCCURRENCE
1. Prescribed Occurrences in relation to the Target shall mean
the occurrence of any of the following:
(a) Reduction of Share Capital: Resolving to reduce its share capital in any way;
(b) Issuance of Debt Securities: Issuing, or agreeing to issue,
convertible notes or other debt securities, save for the Target
Convertible Notes;
(c) Allotment of Shares: Making an allotment of, or granting an
option to subscribe for, any shares or securities convertible into
shares or agreeing to make such an allotment or to grant such an
option or convertible security, save for the Target Convertible
Notes;
(d) Liquidation, Bankruptcy or Insolvency: Its liquidation, bankruptcy or insolvency;
(e) Termination of Business: The termination of substantially
all or part of its assets or business;
(f) Appointment of Assignee, Receiver or Liquidator: The
appointment of any assignee, receiver or liquidator for
substantially all or part of its assets or business; and
(g) Attachment, Sequestration, Execution or Seizure: The
attachment, sequestration, execution or seizure of substantially
all or part of its assets.
2. Prescribed Occurrences in relation to the Vendor shall mean
the occurrence of any of the following:
(a) Liquidation, Bankruptcy or Insolvency: Its liquidation, bankruptcy or insolvency;
(b) Termination of Business: The termination of substantially
all or part of its assets or business;
(c) Appointment of Assignee, Receiver or Liquidator: The
appointment of any assignee, receiver or liquidator for
substantially all or part of its assets or business; and
(d) Attachment, Sequestration, Execution or Seizure: The
attachment, sequestration, execution or seizure of substantially
all or part of its assets.
3. Prescribed Occurrences in relation to the Company shall mean
the occurrence of any of the following:
(a) Granting of Options: Granting an option to subscribe for new
ordinary shares in the Company or securities convertible into
ordinary shares in the Company or agreeing to grant such an option,
save in respect of the transactions as agreed between the Company
and the Vendor in writing;
(b) Issuance of Debt Securities: Issuing, or agreeing to issue,
convertible notes, securities convertible into ordinary shares in
the Company, or other debt securities, save in respect of the
transactions as agreed between the Company and the Vendor in
writing;
(c) Allotment of Shares: Making an allotment of, or granting an
option to subscribe for, any shares or securities convertible into
shares or agreeing to make such an allotment or to grant such an
option or convertible security, save for the Permitted Purchaser
Share Allotments;
(d) Liquidation, Bankruptcy or Insolvency: Its liquidation, bankruptcy or insolvency;
(e) Appointment of Assignee, Receiver or Liquidator: The
appointment of any assignee, receiver or liquidator for
substantially all or part of its assets or business;
(f) Attachment, Sequestration, Execution or Seizure: The
attachment, sequestration, execution or seizure of substantially
all or part of its assets; and
(g) Delisting or Suspension of Trading: The SGX-ST removing the
Company from the Mainboard of the SGX-ST or suspending the trading
of its ordinary shares listed and quoted on the Mainboard for a
period longer than three (3) Market Days or such other period of
extension which the SGX-ST may agree (which for the avoidance of
doubt, shall not include any trading halts of its ordinary shares
listed and quoted on the Mainboard of the SGX-ST, as the case may
be, made at the request of the Company).
For further information, please contact:
Global Invacom Group Limited www.globalinvacom.com
Matthew Garner, Chief Financial Officer Tel: +65 6431 0782
Tel: +44 203 053
3523
finnCap Ltd (Nominated Adviser and Joint www.finncap.com
Broker)
Christopher Raggett / Matthew Radley Tel: +44 207 220
(Corporate Finance) 0500
Mirabaud Securities LLP (Joint Broker) www.mirabaud.com
Peter Krens (Equity Capital Markets) Tel: +44 207 878
3362
Vigo Communications (UK Media & Investor www.vigocomms.com
Relations)
Jeremy Garcia / Fiona Henson Tel: +44 207 390
0238
ginv@vigocomms.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCMJBBTMBJTTFP
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