G-MART is currently a wholly-owned subsidiary of LHB and engaged in the operation of retail supermarkets under the brand name G-MART.

Transcription

1 PROPOSED ACQUISITION BY PANPAGES BERHAD OF 11,400,000 ORDINARY SHARES REPRESENTING THIRTY PERCENT (30%) OF THE EQUITY INTEREST OF G-MART BORNEO RETAIL SDN. BHD. FROM LAY HONG BERHAD FOR A TOTAL CASH CONSIDERATION OF RINGGIT MALAYSIA TEN MILLION SEVEN HUNDRED FIFTY THOUSAND ONLY (RM10,750,000.00) 1. INTRODUCTION The Board of Directors of PanPages Berhad ( Company or PanPages ) wishes to announce that the Company had on 8 May 2017 entered into a Shares Sale Agreement ( SSA ) with Lay Hong Berhad ( LHB or Vendor ) to acquire 11,400,000 ordinary shares representing 30% equity interest in G-MART Borneo Retail Sdn. Bhd. (Company No K) ( G-MART ) for a total cash consideration of RM10,750, ( Purchase Consideration ) ( Proposed Acquisition ). 2. INFORMATION ON G-MART G-MART is a private limited company incorporated in Malaysia under the Companies Act 1965 and having its registered address at No. 9, Jalan Bayu Tinggi 2A/KS6, Taipan 2, Batu Unjur, Klang, Selangor. The issued and paid up share capital of G-MART is RM38,000, represented by 38,000,000 ordinary shares. G-MART is currently a wholly-owned subsidiary of LHB and engaged in the operation of retail supermarkets under the brand name G-MART. The shareholding structure of G-MART after the completion of the Proposed Acquisition is as follows:- Existing Shareholding Upon Completion of the Proposed Acquisition LHB 100% 70% PanPages - 30% Total 100% 100% 3. INFORMATION ON THE VENDOR LHB is a public limited company incorporated in Malaysia under the Companies Act 1965 and having its registered address at No. 9, Jalan Bayu Tinggi 2A/KS6, Taipan 2, Batu Unjur, Klang, Selangor. The issued share capital of LHB is RM121,750, represented by 608,750,000 ordinary shares. LHB was listed on the Main Market of Bursa Malaysia Securities Berhad on the 20 October Its core business activities are in the mass production of basic daily necessities fresh table and specialty chicken eggs, liquid egg, chilled and frozen dressed chicken, chicken parts and processed related chicken products eg. frankfurters, nuggets, fried chicken etc. LHB is also a contractor for packed chicken cuts and chicken related products for certain fast food chain. The group's products are marketed under two registered brands namely Nutriplus and Wise Choice.

2 4. BASIS OF ARRIVING AT THE PURCHASE CONSIDERATION The Purchase Consideration was arrived at on a willing buyer willing seller basis after taking into consideration inter alia, the net asset value of the G-MART based on its unaudited management account as at 31 March In the event the net asset in the unaudited management account of as at 31 March 2017 is lesser by more than 10% of the net asset stated in the audited account as at 31 March 2017, then the Purchase Consideration shall be adjusted accordingly. In the event the net asset in the unaudited management account of as at 31 March 2017 is less by not more than 10% of the net asset stated in the audited account as at 31 March 2017, then the Purchase Consideration shall not be adjusted. Upon execution of the SSA, PanPages shall pay the sum of Ringgit Malaysia One Million (RM1,000,000.00) to the Vendor as a refundable deposit (in the event that the conditions precedents are not satisfied) and part payment of the Purchase Consideration to the Vendor. The remaining balance of Ringgit Malaysia Nine Million Seven Hundred and Fifty Thousand (RM9,750,000.00) shall be payable by PanPages to the Vendor upon the fulfilment of the conditions precedent mentioned in item 5.1 below. 5. SALIENT TERMS OF THE SSA 5.1 Conditions precedent in the SSA The Proposed Acquisition is conditional upon the following being fulfilled:- (a) (b) (c) (d) any approvals from the Relevant Authority (if any); the approval of the shareholders of PanPages if the transacted price triggers the percentage ratios as per Chapter 10 of the Listing Requirements of Bursa Malaysia Securities Berhad (if required); the approval of the board of directors of PanPages in respect of the Proposed Acquisition; and the approval of the board of directors of LHB in respect of the disposal of shares by LHB under the Proposed Acquisition. 5.2 The SSA shall become unconditional on the day upon which all the conditions have been fulfilled in accordance with the provisions of the SSA. 6. SOURCE OF FUNDING The Proposed Acquisition will be financed through a combination of internally generated funds and bank borrowings. The exact mix of the internally generated funds and bank borrowings will be decided by the management at a later stage taking into consideration the gearing level, interest costs as well as internal cash requirements for the business operations of PanPages and its subsidiary companies ( Group ).

3 7. LIABILITIES TO BE ASSUMED AND ADDITIONAL FINANCIAL COMMITMENT There are no liabilities, including contingent liabilities and guarantees, to be assumed by PanPages pursuant to the Proposed Acquisition. The Board does not expect to incur any additional financial commitment for the Proposed Acquisition. 8. RATIONALE FOR THE ACQUISITION AND PROSPECTS OF G-MART The world is changing fast, driven by different shopping habits and ever more advanced technology for the consumers. Grocery is the largest of all retail segments and is moving online. Moreover, customers are changing the way they shop and online is the fastest growing channel in Malaysia. G-MART and LHB have direct resources to fresh poultry and processed food products and are positioned to enter the fast-growing online channel. PanPages is one of the leading SME s marketing solutions providers in Southeast Asia and has 28 years experience in serving the Southeast Asia community. PanPages has the know-how in promoting new products and services to the market and e-commerce, hence, a suitable partner for G-MART in this dramatically changing marketplace. Further, PanPages has full capabilities and ability to produce an e-commerce platform to transform the traditional ways of retail business. PanPages online product offerings had been moving to serve vertical industries such as Industrial Products, Health & Beauty and now Food & Beverage. Grocery retail value should be reframed to emphasize non-price factors such as freshness, quality, customer service and the shopping experience. As for Peninsular Malaysia where e-grocery is gathering momentum, PanPages participation in G-MART can produce synergetic effects for G-MART s and PanPages businesses. The Proposed Acquisition is a strategic business decision that fits in very well with the Group s long-term growth and expansion plans. 9. RISK FACTORS The key risk factors in relation to the Proposed Acquisition which could have an impact on the future prospects of the Group include, but are not limited to the following: 9.1 Acquisition risk There can be no assurance that the current financial performance of the G-MART will be sustainable in the future or that the G-MART will be able to generate sufficient revenue to offset the associated investment cost. 9.2 Economic and political risk PanPages future growth and profitability depends largely on the economic and political conditions in Malaysia. Factors that could adversely affect the financial prospects of the G-MART include, but are not limited to changes in interest rates, inflation, economic growth, taxation, accounting policies, regulations, government policies and political stability. Any adverse changes in one or more of these factors could materially affect the financial and business prospects of G-MART and may consequently affect the recoverability of the PanPages investment cost in G-MART. While the PanPages practises prudent financial risk management and efficient operating procedures, there is no assurance that adverse economic and political developments, which are beyond the control of the PanPages, will not materially affect PanPages.

4 9.3 Business risk There can be no assurance that the G-MART will be able to retain its existing customers. The G-MART has a strong marketing and sales force that focuses on nurturing relationships with their existing customers to ensure continuity of business relationships. As the customer base of the G-MART is relatively large, the G-MART is not dependent on any single customer. Therefore, any loss of customer would not have a material adverse effect on the financial position of the G-Mart. Furthermore, the rate of retention of the G-MART's recurring customers is expected to be high as the cost of advertising with the G-MART is considered to be relatively low as compared to other means of advertising. 9.4 Financing risk The Group intends to finance the Proposed Acquisition through a combination of internally generated funds and bank borrowings. Utilisation of internally generated funds may result in a reduction of funds available for working capital purposes whereas obtaining additional bank borrowings may increase the borrowings and gearing level of the Group. As such, the Proposed Acquisition may have an adverse effect on the cash flow position of the Group. Further, the Group may incur interest expense on the bank borrowings to be obtained. In view that the interest charged on bank borrowings is depending on prevailing interest rates, future fluctuation in interest rates could materially affect the Group s cash flows and profitability. Nevertheless, the Group shall use its best endeavours to manage its cash flow position and funding requirements. The management of PanPages believes that its prudent cash flow management will be able to address the financing risk. 10. EFFECTS OF THE PROPOSED ACQUISITION 10.1 Share capital and substantial shareholders shareholdings The Proposed Acquisition does not involve any issuance of new shares in the Company and therefore will not have any effect on the share capital and substantial shareholders shareholding of the Company Earnings, net assets and gearing The Proposed Acquisition is not expected to have any material effect on the earnings per share and net assets per share PanPages and of the Group for the financial period ending 31 December However, the Proposed Acquisition will increase the gearing of PanPages and the Group depending on the level of borrowing taken for the Proposed Acquisition. 11. APPROVALS REQUIRED The Proposed Acquisition is not subject to the approval of PanPages s shareholders and/or any other relevant authorities and is not conditional upon any other corporate proposal.

5 12. PERCENTAGE RATIOS The highest percentage ratio applicable to the Proposed Acquisition pursuant to paragraph (g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 21.88%, based on the latest audited consolidated financial statements of the Company for the financial year ended 31 December DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors and/or substantial shareholders and/or persons connected with them has any interest, whether direct or indirect, in the Proposed Acquisition. 14. DIRECTORS STATEMENT The Board, having considered all aspects of the Proposed Acquisition, including but not limited to the rationale of the Proposed Acquisition is of the opinion that the Proposed Acquisition is in the best interest of the Company. 15. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Acquisition is expected to be completed within two (2) months from the date of the SSA. 16. DOCUMENTS AVAILABLE FOR INSPECTION The SSA is available for inspection at the Registered Office of the Company during normal office hours from Mondays to Fridays (except public holidays) at 802, 8th Floor, Block C Kelana Square, 17 Jalan SS7/26, Petaling Jaya, Selangor Darul Ehsan. This announcement is dated 8 May 2017.