GLOBAL YELLOW PAGES LIMITED (Company Registration No G) (Incorporated in the Republic of Singapore)

Transcription

1 GLOBAL YELLOW PAGES LIMITED (Company Registration No G) (Incorporated in the Republic of Singapore) 1. PROPOSED LICENCE OF YELLOW PAGES DIGITAL SOLUTIONS TO YELLOW PAGES PTE. LTD. ( NEWCO ) 2. PROPOSED SUBSCRIPTION OF 20% OF THE ISSUED SHARE CAPITAL OF NEWCO 3. PROPOSED SUBSCRIPTION OF 10% OF THE ISSUED SHARE CAPITAL OF PAGE ADVISOR HOLDINGS PTE LTD ( PAH ) 1. INTRODUCTION 1.1 The board of directors (the Board or the Directors ) of Global Yellow Pages Limited (the Company and together with its subsidiaries, the Group ) wishes to announce that the Company has on 31 July 2017 entered into the following agreements: (a) (b) (c) licensing agreement ( Licensing Agreement ) with NewCo for the proposed licence by the Company of the Licensed Rights (as defined in paragraph 2.2 below) to NewCo ( Proposed Licence ); investment agreement ( NewCo Investment Agreement ) between the NewCo Shareholders (as defined in paragraph 2.7 below) and NewCo relating to, inter alia, the subscription by the Company of new ordinary shares constituting 20% of the issued share capital of NewCo ( Proposed NewCo Investment ); and subscription agreement ( PAH Subscription Agreement ) with PAH and Mr Fabian Lim for the proposed subscription by the Company of new ordinary shares constituting 10% of the issued share capital of PAH ( Proposed PAH Subscription ). (collectively, the Proposed Transactions ) Background 1.2 The Company s existing businesses include the Search Segment (as described in paragraph 1.3 below), property investment, development and management ( Property Segment ), and food and beverage. 1.3 The Search Segment comprises the following product offerings: (a) (b) internet search solutions, database sales and marketing, web design, maintenance and hosting solutions, sales of Google AdWords, and sales and marketing of accounting, human resource and payroll solutions software (collectively, YP Digital ); and print directories ( YP Print ). 1.4 The business environment for the Search Segment has in recent years been increasingly challenging for the Group. As regards YP Print, this is due to a steady decline in reliance by both businesses and consumers on hard-copy directory listing, advertising and search solutions in light of the growing use of the internet, mobile and online platforms in Singapore. As regards YP Digital, this is largely due to increased competition brought about by an abundance of other online search, listing and advertising platforms, including search engines and social media. The Group has been attempting to improve its YP Digital business through product enhancement and innovation, but with not much success.

2 1.5 As such, the Search Segment has been declining significantly year on year for the past three years. It is expected to be loss-making for the most recently completed financial year ended 30 June As the Company no longer views the Search Segment as viable moving forward, the Company has decided to cease YP Print and revamp YP Digital so that the Company can focus its resources and capital on further developing its core Property Segment, which is expected to bring better returns. 1.7 The Company will publish its final edition of print directories this year. As for YP Digital, the Company will revamp the solutions with the Proposed Licence. Arising from the ceasing of YP Print and the revamp of YP Digital, there will be redundancies of employees affected. 2. THE PROPOSED TRANSACTIONS Proposed Licence 2.1 The Company proposes to extract and maximise value for the Company from the revamp of YP Digital by licensing the Licensed Rights (as defined in paragraph 2.2 below) to NewCo, for a license fee of a proportion of revenue attributable to, inter alia, the Licensed Rights. The Proposed Licence will commence on the Subscription Date (as defined in paragraph 2.8 below), for a term of three (3) years, renewable on terms to be agreed by the parties. 2.2 The Licensed Rights include, inter alia, intellectual property rights relating to (a) Internet Yellow Pages ( IYP ) including the IYP website; (b) accounting, human resource and payroll solutions software ( YP Business Software ) sales and marketing rights; (c) business listings data ( YP Data ); and (d) certain trademarks. 2.3 NewCo will only be able to use the Licensed Rights for certain permitted uses in Singapore, including the development of the IYP website and related digital platforms, web design and hosting solutions, development and sales of YP Data, and sales of YP Business Software ( Permitted Uses ). 2.4 The licence of the Licensed Rights stated in paragraphs 2.2(a) and (b) above is exclusive, which means the Company will not be able to use them in relation to the Permitted Uses during the term of the Proposed Licence. The licence of the Licensed Rights stated in paragraphs 2.2(c) and (d) above is non-exclusive, which means the Company will be able to use them for any purpose during the term of the Proposed Licence, including the Permitted Uses. 2.5 In the event the Approvals (as defined in paragraph 2.8 below are not obtained by 30 October 2017, unless otherwise agreed by the Company and NewCo, the Licensing Agreement will lapse. Proposed NewCo Investment 2.6 As at the time of this announcement, NewCo is a newly incorporated Singapore company incorporated by the Company, which is currently the sole shareholder, with a total issued and paid up share capital of S$ Shortly after this announcement and pursuant to the terms of the NewCo Investment Agreement, the NewCo Shareholders will subscribe for such number of shares in NewCo such that their respective shareholdings and initial capital contributions (including the initial $2 paid up share capital contribution of the Company) are as follows: Name of shareholder Shareholding percentage Initial capital contribution 1. Mr Fabian Lim 35% S$10.50

3 2. Mr Ng Tiong Gee 27.5% S$ Company 20% S$6.00 (1) 4. PAH 10% S$3.00 (2) 5. Ms Lim Lay Poh 7.5% S$2.25 (collectively, the NewCo Shareholders ) 2.8 As soon as practicable and no later than five (5) business days after all relevant approvals ( Approvals ) from the SGX-ST and/or shareholders of the Company ( Shareholders ) in connection with the Proposed Transactions (if required) are obtained ( Subscription Date ), the NewCo Shareholders will make the following additional capital contributions to NewCo such that the total paid up share capital of NewCo is S$300,000: Name of shareholder Shareholding percentage Additional capital contribution 1. Mr Fabian Lim 35% S$104, Mr Ng Tiong Gee 27.5% S$82, Company 20% S$59,994 (1) 4. PAH 10% S$29,997 (2) 5. Ms Lim Lay Poh 7.5% S$22, Notes: (1) The capital contribution by the Company (20%) will not be in cash, but in the form of the provision of office space and support facilities by the Company up to a value of S$60,000 to NewCo. (2) In consideration for the Proposed PAH Subscription, the capital contribution for PAH (10%) in NewCo will be paid for in kind by the Company on behalf of PAH, through the provision of office space and support facilities by the Company up to a value of S$30,000 to NewCo, Please refer also to paragraphs 2.17 to 2.22 below on the Proposed PAH Subscription for more information. NewCo Shareholders 2.9 Mr Fabian Lim is an online entrepreneur and the founder of, inter alia, PageAdvisor.com (Southeast Asia s first real-time mobile marketplace for services) and ClickMedia Pte Ltd (a digital marketing consulting agency). He specialises in omni-channel marketing, search engine marketing, search engine optimisation, social media marketing, web analytics, usability analysis, and marketing automation. His online marketing clients include multinational companies, public sector organisations, and top regional and local brands in the telecommunications, high technology, education, and retail industries. As at the date of this Announcement, he owns approximately 59% of PAH Mr Ng Tiong Gee is a non-executive and independent director of the Company and he is in the information technology profession PAH is an investment holding company incorporated in Singapore. It wholly owns Page Advisor Pte Ltd and Page Advisor Sdn Bhd. It is a majority shareholder of PT Klik EO Indonesia. Page Advisor is Southeast Asia s first real-time mobile marketplace for services. Its areas of focus include home, lifestyle, retail and dining services. As at the date of this Announcement, none of the shareholders of PAH are interested persons of the Company Ms Lim Lay Poh is a private investor. NewCo Investment Agreement 2.13 Pursuant to the NewCo Investment Agreement, as long as the Company holds at least 10% of the issued share capital of NewCo, it shall have the right to nominate one (1) director to the board of directors of NewCo Pending the obtaining of the Approvals, NewCo will provide support services to the Company in respect of YP Digital as an interim measure.

4 2.15 If the Approvals are not obtained by 30 October 2017, the NewCo Shareholders and NewCo will review and determine the future direction of NewCo. Proposed NewCo Investment as an interested person transaction 2.16 Notwithstanding that the Proposed NewCo Investment is an interested person transaction due to Mr Ng Tiong Gee subscribing for 27.5% of the issued share capital of NewCo, the value of the transaction (i.e. S$60,000) is less than S$100,000, and is also less than 3% of the Group s latest audited net tangible assets of S$40.4 million. Therefore Rules 905(1) and 906(1) of the Listing Manual do not apply to the Proposed NewCo Investment. Proposed PAH Subscription 2.17 In connection with the Proposed Licence and the Proposed NewCo Investment, the Company also proposes to undertake the Proposed PAH Subscription for the rationale and benefit elaborated in paragraph 4 below The consideration for the Proposed PAH Subscription is S$30,000, which will be paid for by the Company in the manner described in note 2 of paragraph 2.8 above The completion date of the Proposed PAH Subscription is the later of (i) the Subscription Date or (ii) the date when all the PAH Subscription CPs (as described in paragraph 2.20 below) are fulfilled or waived by the Company, or such other date as the parties to the PAH Subscription Agreement may agree in writing The conditions precedent to completion of the Proposed PAH Subscription ( PAH Subscription CPs ) are: (a) (b) (c) (d) the Approvals being obtained; completion of the Proposed NewCo Investment; all consents or approvals from relevant authorities for the Proposed PAH Subscription being obtained in a form and on terms (if any) satisfactory to the Company and continuing in force; and where terms of any contracts contain any restriction or right to terminate exercisable pursuant to the Proposed PAH Subscription, written confirmation being obtained (and continuing in force) in a form and on terms (if any) satisfactory to the Company by the counterparties thereto, of the waiver of such restriction or right to terminate In the event the PAH Subscription CPs are not fulfilled or waived by the Company (or completion of the Proposed PAH Subscription for any reason does not occur) by 30 October 2017, PAH will forthwith transfer to the Company at no consideration its shares in NewCo Both PAH and Mr Fabian Lim warrant that the Company s shareholding proportion in PAH will remain at 10% notwithstanding any conversion of the convertible loan of up to S$2,500,000 pursuant to an agreement to be entered into between PAH and any lender to PAH. 3. BASIS OF CONSIDERATION FOR THE PROPOSED NEWCO INVESTMENT AND THE PROPOSED PAH SUBSCRIPTION The consideration by the Company for the Proposed NewCo Investment of S$60,000 was arrived at after arms length discussions among the NewCo Shareholders, taking into consideration, inter alia, the funding requirements of NewCo.

5 The consideration by the Company for the Proposed PAH Subscription of S$30,000 was arrived at after arms length negotiations between the Company, Mr Fabian Lim and PAH on a willing-buyer willing-seller basis, taking into consideration, inter alia, the following factors: (a) (b) (c) (d) the experience and expertise of Fabian and PAH in the digital and technology industry; the book value and net tangible asset value of shares constituting 10% of the issued share capital of PAH of S$163,909 and S$171,311 respectively, based on the unaudited pro forma accounts of PAH for the 9-months ended 31 March 2017 ( 9M2017 ); the pro forma unaudited net loss before income tax, minority interest and extraordinary items attributable to a 10% shareholding in PAH for 9M2017 of S$57,949; and the rationale for and benefits to the Company of the Proposed PAH Subscription as set out in paragraph 4 below. 4. RATIONALE FOR AND BENEFITS OF THE PROPOSED TRANSACTIONS As elaborated in paragraphs 1.4 to 1.7 above, the Company has decided to revamp the Search Segment as it does not view the Search Segment as viable moving forward with the current business model. The Proposed Licence will allow the Company to extract and maximise value from the revamp of the loss-making YP Digital. Instead of discontinuing YP Digital without future revenue, the Proposed Licence will enable the Company to collect a licence fee of a proportion of NewCo s revenue attributable to, inter alia, the Licensed Rights for at least three (3) years (and more if the Proposed Licence is renewed for further periods). This will result in a positive impact on the Group s financial position due to the replacement of the loss-making YP Digital with an income-accretive arrangement. The Proposed NewCo Investment and Proposed PAH Subscription will also allow the Company to participate in and benefit from the potential growth and success of NewCo (which may also develop other product offerings in the future) and PAH in the digital sphere, while it focuses on the Property Segment. The Company believes that with the relevant experience and expertise of the various shareholders, the digital business of NewCo with the benefit from the Licensed Rights and the brand name will be able to reach greater heights and achieve greater success than what the Company has been able to achieve. This will ultimately benefit the Company through the licence fee from the Proposed Licence (which is based on revenue attributable to, inter alia, the Licensed Rights), as well as the Company s shareholdings in both NewCo and PAH. 5. RELATIVE FIGURES OF THE PROPOSED NEWCO INVESTMENT AND THE PROPOSED PAH SUBSCRIPTION UNDER RULE 1006 OF THE LISTING MANUAL Proposed NewCo Investment The relative figures for the Proposed NewCo Investment as computed on the bases set out in Rule 1006 of the Listing Manual and the latest announced unaudited consolidated financial statements of the Group for 9M2017 are as follows: Relative Figures Rule 1006(a) The net asset value of the assets to be disposed of, compared with the Group's net asset value.

6 Rule 1006(b) Rule 1006(c) Rule 1006(d) Rule 1006(e) The net profits attributable to the assets acquired or disposed of, compared with the Group's net profits. The aggregate value of the consideration given or received, compared with the Company's market capitalisation based on the total number of issued shares excluding treasury shares. The number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue. The aggregate volume or amount of proved 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. Not applicable (1) 0.18% (2)(3) Notes: (1) NewCo will be a newly incorporated company and has no historical net profits for comparison. (2) The consideration for 20% of the issued share capital of NewCo is S$60,000. (3) The Company s weighted average share price as at 25 July 2017 being the last market day when the Company s shares were traded preceding the date of the NewCo Investment Agreement is S$ Source: Bloomberg L.P. The market capitalisation of the Company is S$34,083,411, based on 209,100,682 shares in issue (excluding treasury shares) as at 25 July 2017 (being the last market day when the Company s shares were traded preceding the date of the NewCo Investment Agreement) and the weighted average share price of the Company s shares transacted on the SGX-ST on the same date of S$ Proposed PAH Subscription The relative figures for the Proposed PAH Subscription as computed on the bases set out in Rule 1006 of the Listing Manual and the latest announced unaudited consolidated financial statements of the Group for 9M2017 are as follows: Relative Figures Rule 1006(a) Rule 1006(b) Rule 1006(c) The net asset value of the assets to be disposed of, compared with the Group's net asset value. The net profits attributable to the assets acquired or disposed of, compared with the Group's net profits. The aggregate value of the consideration given or received, compared with the Company's market capitalisation based on the total number of issued shares excluding treasury shares % (1) 0.09% (2)(3)

7 Rule 1006(d) Rule 1006(e) The number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue. The aggregate volume or amount of proved 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: (1) Based on the pro forma unaudited net loss before income tax, minority interest and extraordinary items attributable to a 10% shareholding in PAH for 9M2017 of S$57,949 and the unaudited net profit before income tax, minority interest and extraordinary items of the Group for 9M2017 of S$4,079,519. (2) The consideration for 10% of the issued share capital of PAH is S$30,000. (3) The Company s weighted average share price as at 25 July 2017 being the last market day when the Company s shares were traded preceding the date of the PAH Subscription Agreement is S$ Source: Bloomberg L.P. The market capitalisation of the Company is S$34,083,411, based on 209,100,682 shares in issue (excluding treasury shares) as at 25 July 2017(being the last market day when the Company s shares were traded preceding the date of the PAH Subscription Agreement) and the weighted average share price of the Company s shares transacted on the SGX-ST on the same date of S$ Based on the latest announced unaudited consolidated accounts for the Group for 9M2017, none of the relative figures for the Proposed NewCo Investment and the Proposed PAH Subscription exceed 5%. Accordingly, the Proposed NewCo Investment and the Proposed PAH Subscription constitute Non-Discloseable Transactions as defined under Chapter 10 of the Listing Manual. The Board notes that the figure computed according to Rule 1006(b) in relation to the Proposed PAH Subscription is negative. In accordance with Rule 1007(1) of the Listing Manual, the Company is consulting the SGX-ST. The Proposed PAH Subscription is subject to any requirements stipulated by the SGX-ST following this consultation. 6. SERVICE CONTRACTS No person will be appointed as a Director of the Company in connection with the Proposed Transactions and accordingly, no service contract in relation thereto will be entered into between the Company and any such person. 7. INTERESTS OF DIRECTORS AND CONTROLLING SHAREHOLDERS Save for Mr Ng Tiong Gee, none of the Directors or controlling shareholders of the Company has any interest, direct or indirect, in the Proposed Transactions, other than through their respective shareholdings (if any) in the Company.

8 8. DOCUMENTS FOR INSPECTION Copies of the NewCo Investment Agreement and PAH Subscription Agreement are available for inspection at the registered office of the Company at 1, Lorong 2 Toa Payoh, Yellow Pages Building, Singapore during normal business hours for three (3) months from the date of this announcement. Shareholders and potential investors should note that the Proposed Transactions are subject to the fulfilment of certain conditions as described in paragraph [2] above, and accordingly should exercise caution when trading in the Company s shares. Persons who are in doubt as to the action they should take should consult their legal, financial, tax or other professional advisers. The Company will make further announcements on the Proposed Transactions as and when appropriate. BY ORDER OF THE BOARD Lee Wei Hsiung Company Secretary Dated: 1 August 2017