Elektromotive Group Limited

  • Press Room
    Email This Print This

    Proposed Investment In Auston Technology Group Pte Ltd By Panpac Media.Com Limited

    BackMay 05, 2002

    The Board of Directors of Panpac Media.com Limited (the "Company") wishes to announce that the Company intends to acquire shares in the capital of Auston Technology Group Pte Ltd ("ATG") from the existing shareholders of ATG ("Vendors") which will result in ATG becoming a subsidiary of the Company ("Proposed Acquisition") (currently, the Company owns approximately 2.4% of the total issued and paid-up capital of ATG). Pursuant thereto, the Company has on 3rd of May 2002 made a written proposal to the Vendors ("Written Proposal") stating, inter alia, its intention to acquire ATG shares and the terms and conditions on which the Proposed Acquisition will be made.

    About ATG

    ATG was incorporated on 14 December 1999 and serves as the holding company for the Auston group of companies whose main operating subsidiaries are Auston International Pte Ltd ("Auston") (100% owned), Data Information Systems Pte Ltd ("DIS") (100% owned) and Juzlaw Pte Ltd ("Juzlaw") (80% owned) ("ATG Group").

    The primary activity of the ATG Group is the provision of private education undertaken by Auston. Auston is a private education provider focusing on the provision of diploma, degree and masters programmes for working adults in conjunction with 5 accredited universities in Australia, UK and US. It has campuses in Singapore and Perth. The programmes offered by Auston are principally in the fields of management, marketing and IT.

    In addition to education, ATG is also engaged in the IT business through DIS and Juzlaw. The business of DIS is the provision of systems integration solutions to the Small and Medium Enterprises in Singapore. Juzlaw is a licensed agent for the Asia Pacific region of US-based Elite Information Group, Inc. in the distributing and marketing of the ELITE enterprise software solutions targeted at law firms and accounting firms.

    Financial Highlights of ATG Group

    Set out below are the key unaudited consolidated financial highlights of the ATG Group as at 31 March 2002 and for the eight-month period ended 31 March 2002 extracted from the management accounts:-


    As at 31 March 2002 S$'000
    Non Current Assets 3,350
    Current Assets 5,771
    Current Liabilities (2,593)
    Shareholders' Equity 6,528
    For the Eight Months Ended 31 March 2002 S$'000
    Sales 8,088
    Profit Before Tax 2,540



    Rationale for the Investment

    (a) Diversifying Revenue Base

           

        Currently, the core business of the Company and its group companies (the "Group") is in publishing, selling and distributing books, periodicals, and magazines covering a wide range of interests such as IT, personal finance, interior design and other general lifestyle matters.

           

        The Proposed Acquisition if successful, will represent a significant step in the transformation of our Group into a leading communications and education player in Asia. Diversifying into the fast-growing education business would also allow us to broaden the earnings base of our Group.

    (b) Prospects of the education business of Auston are bright

        Since its establishment in 1996 with a student enrolment of 15, it has grown substantially and now has an enrolment of about 1750 students. Under the strong management team led by Mr Ken Yeo, Managing Director of Auston, our Directors believe that Auston will continue to grow in the foreseeable future and contribute to the earnings of the Group.

           

        Auston is also in the process of developing affiliate programs in China (in particular Shanghai and Xian) and Australia (Sydney and Melbourne). This regionalisation exercise complements, and is in line with our Group's plan to expand our business and operations into the PRC.

           

    (c) Experienced Management Team

        The founder and Managing Director Mr Ken Yeo has been in the education industry for more than 10 years and is responsible for the overall management of the business operations of Auston. Mr Ken Yeo is supported by a team of experienced personnel, the majority of whom have been with Auston since its inception.

           

    Currently, Auston is in the process of preparing for a listing on the Singapore Exchange Securities Trading Limited ("SGX-ST"). We intend to continue to pursue such proposed listing plan in the event that the Proposed Acquisition is successful. Subsequent to the Proposed Acquisition, the ATG Group will be re-structured such that the operating companies will be held directly by us at such time as shall be subject to the relevant legal and regulatory requirements in connection with the listing.

    Principal Terms of the Acquisition

    (i) Amount of ATG Shares to be acquired

           

        The amount of additional shares of S$1.00 each in the capital of ATG to be acquired by the Company shall comprise such number of ordinary shares representing approximately 58% of the total issued and paid-up capital of ATG as at the Closing Date (as hereinafter defined) ("ATG Shares"). The Company reserves the right to acquire such further amount of ATG Shares as it deems fit.

             

        This Proposed Acquisition shall extend to all the issued and paid-up shares in the capital of ATG as at the Closing Date including any new shares issued pursuant to the valid exercise of any existing share options of ATG prior to the Closing Date.


    (ii) Consideration

        Each ATG Share is valued at S$4.16 ("Purchase Price") which will be satisfied by the issue of new ordinary shares of S$0.05 each in the capital of the Company ("Consideration Shares") at an issue price of S$0.136 ("Market Price"), being the volume weighted average traded price of the Company's shares on the SGX-Sesdaq during the period from 12 April 2002 to 3 May 2002 (both dates inclusive).

           

        The Purchase Price was arrived at after taking into consideration, amongst others, the following:-

           

        1. the valuation of comparable companies in the education business that are listed on the SGX-ST, adjusting for the fact that the ATG Shares are illiquid and not publicly traded;

               

        2. the rationale set out under the section entitled "Rationale for the Investment"; and

               

        3. the unaudited consolidated financial results of ATG Group for the eight month period ended 31 March 2002 as set out under the section entitled "Financial Highlights of ATG Group".

               

        The Purchase Price represents approximately 2.4 times the unaudited consolidated net asset value ("NAV") per share of ATG Group as at 31 March 2002.

           

        Assuming that the Company acquires exactly 58.0 per cent. of ATG or 2,900,000 ATG Shares, the number of Consideration Shares to be issued to the Vendors will be 88,705,882 valued at S$12,064,000 based on the Market Price, constituting approximately 39.1 per cent. of the existing issued share capital of the Company. In the event that the Company decides to acquire ATG Shares representing more than 58.0 per cent. of ATG, the number of Consideration Shares to be issued shall be increased accordingly.

           

        The ATG Shares shall be acquired fully paid-up and free from all charges, liens, pledges and other encumbrances, and together with all rights, benefits and entitlements attached thereto as at the date of the Written Proposal and thereafter attaching thereto, including the right to receive all dividends, rights and other distributions, if any, declared, paid or made thereon.

           

    (iii) Closing Date

        The Company's Written Proposal will be opened for acceptance by the Vendors from the time of completion of the meeting of the Vendors at 6pm on 10 May 2002 (for the purposes of the Proposed Acquisition) to 5 pm on 13 May 2002 ("Closing Date").

           

    Conditions Precedent

    The Proposed Acquisition is conditional upon the following:-

             

    (a) approval of the independent shareholders of the Company to be obtained at an extraordinary general meeting;

         

    (b) the Company receiving valid acceptances in respect of such number of ATG Shares amounting to not less than 58% of the total issued and paid-up capital of ATG as at the Closing Date;

         

    (c) approval from SGX-ST for (I) the transaction contemplated herein and (II) the listing and quotation of the Consideration Shares on the Sesdaq, confirmation from the SGX-ST of the non-applicability of the chain listing rules of the SGX-ST Listing Manual for the listing of Auston on the SGX-ST and waiver from SGX-ST of the requirements of Clause 1008 of the SGX-ST Listing Manual, and any other relevant and requisite legal or regulatory consents and approvals;

         

    (d) the Vendors shall sell all and not part of the ATG Shares held in the name of such Vendor Provided Always That this condition shall not be applicable to each of the Vendor who holds more than 50,000 ATG Shares; and

         

    (e) the Company receiving written evidence from ATG that all existing pre-emptive rights have been waived by all the Vendors.

    The Company reserves the right to waive the requirement of any of the above conditions to such extent as may be permitted by law.

    Very Substantial Acquisitions under Clause 1008 of the SGX Listing Manual

    Based on the unaudited consolidated net profits before tax ("PBT") of ATG Group for the eight-month period ended 31 March 2002, the share of PBT of ATG represented by 58.0 per cent. of ATG exceeds the audited consolidated PBT of the Group for the nine-month period ended 31 December 2001. Based on the Market Price, the value of the Consideration Shares to be issued for acquiring 58.0 per cent. of ATG also exceeds the audited NAV of the Group as at 31 December 2001. As such, the Proposed Acquisition could be deemed to be a "Very Substantial Acquisition" under Clause 1008 of the SGX Listing Manual.

    The Company will be seeking a waiver of the requirements of Clause 1008 of the SGX Listing Manual from the SGX-ST, which is a condition precedent to the Proposed Acquisition.

    Directors' and Substantial Shareholders' Interest - Chapter 9A Transaction

    The Vendors include persons falling within the definition of "Interested Persons" under Chapter 9A of the Listing Manual ("Interested Vendors").

    As at the date of this announcement, our Executive Director and shareholder Mr Chong Huai Seng has a direct interest of 4.0% in the issued share capital of ATG. Our Managing Director and shareholder Mr Ricky Ang Gee Hing has a direct interest of 3.0%. Fontana Investments Pte Ltd ("Fontana") in which Mr Ricky Ang owns a controlling interest, holds 8.0% in the issued share capital of ATG. Our Non-Executive Directors Mr Low Song Take and Mr Kevin Low Ka Choon each holds approximately 4.0% and 1.2% respectively of the issued share capital of ATG. Our major shareholder, International Press Holdings Pte Ltd ("IPH"), of which Mr Low Song Take and Mr Kevin Low Ka Choon are controlling shareholders, holds approximately 2.4% of the issued share capital of ATG. Mr Cheong Poh Kin, our Independent Director, holds approximately 3.8% of the issued share capital of ATG.

    As such, the Proposed Acquisition is an interested party transaction under Chapter 9A of the Listing Manual.

    The value of the consideration for the Proposed Acquisition exceeds 5% of the net tangible assets of the Group as of 31 December 2001. The Proposed Acquisition therefore exceeds Threshold 2 of Chapter 9A of the Listing Manual and shareholders' approval is required pursuant to Chapter 9A and an Independent Financial Adviser ("IFA") will have to be appointed in accordance with the requirements of Chapter 9A.

    Accordingly, the Company will seek shareholders' approval for the Proposed Acquisition at an extraordinary general meeting ("EGM") to be convened.

    Save as disclosed above, none of the substantial shareholders and Directors of the Company has any interest, direct or indirect, in the Proposed Acquisition.

    Changes in Shareholding of the Company as a result of the Proposed Acquisition

    The following is an illustration of the shareholdings in the Company of the Interested Vendors before and after the Proposed Acquisition (assuming that the Interested Vendors sell all of their shares in the capital of ATG):-

    Before Proposed Acquisition

    Direct Interest in shares of the Company
    Before Proposed Acquisition

    As a % of existing issued capital
    After Proposed Acquisition

    Direct Interest in shares of the Company
    After Proposed Acquisition

    As a % of enlarged issued capital
    Directors
    Ricky Ang Gee Hing (1)
    4,953,000
    2.2
    9,541,235
    3.0
    Chong Huai Seng (2)
    7,150,000
    3.1
    13,267,647
    4.2
    Low Song Take (3)
    -
    0.0
    6,117,647
    1.9
    Kevin Low (3)
    -
    0.0
    1,835,294
    0.6
    Cheong Poh Kin
    -
    0.0
    5,811,765
    1.8
    Substantial Shareholders
    Fontana (1)
    18,162,000
    8.0
    30,397,294
    9.6
    Waterside Investments Holdings Pte Ltd (2)
    36,270,000
    16.0
    36,270,000
    11.5
    IPH (3)
    43,420,000
    19.1
    47,090,588
    14.9

    Footnote:-

    (1) Mr Ricky Ang Gee Hing owns directly and indirectly the entire share capital of Fontana.
    (2) Mr Chong Huai Seng owns directly and indirectly the entire share capital of Waterside Investments Holdings Pte Ltd.
    (3) Mr Low Song Take and Mr Kevin Low Ka Choon and their associates indirectly own 50% of the share capital of IPH.

    Independent Financial Adviser

    The Company will appoint an IFA to advise the Independent Directors of the Company in connection with the Proposed Acquisition. The advice of the IFA, the statement by the Audit Committee of the Company on their views on the terms of the Proposed Acquisition and the recommendations of the Independent Directors will be set out in a circular convening the EGM which will be dispatched in due course, subject to the satisfaction of the conditions precedent.

    Our Directors who are Interested Vendors will abstain from making any recommendations to shareholders on the resolutions and the Interested Vendors will also abstain from voting on the resolutions proposed to be passed at the EGM in respect of their shareholdings in the Company.

    Financial Effects of the Proposed Acquisition

    Share Capital

    As at the date of this Announcement, the Company has an authorised share capital of S$20,000,000 divided into 400,000,000 ordinary shares of S$0.05 each ("Shares") and an issued and paid-up share capital of S$11,354,350 divided into 227,087,000 Shares.

    The Proposed Acquisition will have no impact on the authorised share capital of the Company. Assuming that the Company acquires exactly 58.0 per cent. of ATG or 2,900,000 ATG Shares, the Company's issued and paid-up share capital will increase to S$15,789,644 divided into 315,792,882 Shares.

    NAV

    The financial effects of the Proposed Acquisition on the NAV of the Group as at 31 December 2001 are computed on the following bases and assumptions:-

    1. the Proposed Acquisition was completed on 1 August 2001;
    2. an additional 58.0 per cent. of ATG was acquired for a consideration value of S$12,064,000;
    3. the unaudited consolidated NAV of the ATG Group as at 31 December 2001 was S$5,565,000 (extracted from management accounts); and
    4. the unaudited consolidated profits after tax and minority interest of the ATG Group for the period commencing 1 August 2001 and ending 31 December 2001 ("5 Months Results") were approximately S$1,128,000 (extracted from management accounts).

    As at 31 Dec 2001
    NAV
    (S$'000)
    Issued Shares
    (number)
    NAV per Share
    (cents)
    Per Audited Accounts
    8,855
    220,212,000
    4.02
    Adjusted for:-
    88,705,882
    Investment cost
    12,064
    Share of 5 Months Results
    676
    Amortisation of goodwill arising from consolidation
    (208)

    Adjusted
    21,387
    308,917,882
    6.92


    Earnings

    The financial effects of the Proposed Acquisition on the earnings per Share of the Group for the nine-month period ended 31 December 2001 are computed based on the following bases and assumptions:-

    1. the Proposed Acquisition was completed on 1 August 2001;
    2. an additional 58.0 per cent. of ATG was acquired for a consideration value of S$12,064,000;
    3. the unaudited consolidated NAV of the ATG Group as at 31 December 2001 was S$5,565,000 (extracted from management accounts); and
    4. the unaudited consolidated profits after tax and minority interest of the ATG Group for the period commencing 1 August 2001 and ending 31 December 2001 ("5 Months Results") were approximately S$1,128,000 (extracted from management accounts).


    For the nine months ended 31 December 2001
    Profits after tax and MI
    (S$'000)
    Issued Shares
    (number)
    Earnings per Share
    (cents)
    Per Audited Accounts
    210
    220,212,000
    0.10 (1)
    Adjusted for:-
    88,705,882
    Share of 5 Months Results
    676
    Amortisation of goodwill arising from consolidation
    (208)
    Adjusted
    678
    308,917,882
    0.26 (2)

       

    Notes:

       

    (1) Calculated based on the weighted average issued share capital of 209,101,000.
    (2) Calculated based on the weighted average issued share capital of 258,382,000.

    Gearing

    As the purchase consideration would be fully satisfied from the issue of Consideration Shares, there would be no impact on the borrowings of the Group.

    Apart from a bank overdraft of S$72,612, the ATG Group has no outstanding bank borrowings as at 31 March 2002. As of the same date, the ATG Group has S$4.0mil in fixed deposits and cash at bank.