the subscription for up to 20,000,000 redeemable preference shares in the SPV ( RPS ) by MNC for a total cash consideration of RM20,000,000.

Transcription

1 M N C WIRELESS BERHAD ( MNC OR COMPANY ) PROPOSED JOINT VENTURE WITH SPNB DANA SDN BHD ( SPNB DANA ), A WHOLLY- OWNED SUBSIDIARY OF SYARIKAT PERUMAHAN NEGARA BERHAD ( SPNB ) TO SET UP A SPECIAL PURPOSE VEHICLE COMPANY ( SPV ) TO JOINTLY ASSIST AND SUPPORT SPNB DANA IN ITS UNDERTAKING AND DEVELOPMENT OF THE BUSINESS OF SHORT-TERM LOANS FOR DOWN-PAYMENTS AND/OR DIFFERENTIAL SUMS FOR ELIGIBLE HOMEBUYERS OF HOUSING DEVELOPMENTS DEVELOPED BY SPNB AND ITS SUBSIDIARIES ( SPNB GROUP ) ( PROPOSED JOINT VENTURE ) 1. INTRODUCTION On behalf of the Board of Directors of MNC ( Board ), M&A Securities Sdn Bhd wishes to announce that MNC had on 24 October 2017 entered into a subscription and shareholder s agreement ( SSA ) with SPNB Dana for the following: (i) (ii) the formation and operation of the SPV to jointly assist and support SPNB Dana in its undertaking and development of the business of providing short-term loans for downpayments and/or differential sum for eligible homebuyers of housing developments developed by SPNB Group ( Business ); and the subscription for up to 20,000,000 redeemable preference shares in the SPV ( RPS ) by MNC for a total cash consideration of RM20,000,000. Further details of the Proposed Joint Venture are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED JOINT VENTURE 2.1 The Proposed Joint Venture On 24 October 2017, MNC and SPNB Dana has agreed (via the SSA) to form the SPV* to jointly assist and support SPNB Dana in its undertaking and development of the Business, subject to the approval of the relevant authorities where required. Note: * the SPV has yet to be incorporated. The SSA was entered on the basis that MNC will be appointed as the technology solution partner for SPNB Dana to develop, among others, an inclusive mobile application and website technology platform which will comprise a Business-to-Business (B2B) focused platform for companies operating within the SPNB Group. The terms and conditions of the said appointment have yet to be finalised and will be governed by a separate agreement to be entered into. MNC and SPNB Dana shall incorporate the SPV and subscribe for ordinary shares in the SPV ( SPV Shares ) in the following manner: (i) (ii) SPNB Dana shall subscribe for 700,000 new SPV Shares for a sum of RM700,000; and MNC shall subscribe for 300,000 new SPV Shares for a sum of RM300,000. 1

2 Resulting thereto, the shareholding structure of the SPV shall be as follows: Shareholding Ratio SPNB Dana 70% MNC 30% Total 100% In addition to the above, MNC shall also subscribe for up to 20,000,000 RPS, subject to a minimum of 10,000,000 RPS, for a maximum cash consideration of RM20,000,000. The proceeds from the RPS issuance shall be advanced to SPNB Dana for the purpose of undertaking the Business ( Advances ). The indicative salient terms of the RPS are set out in Section 2.3(ii) below. It is the intention of MNC to fund the subscription of the RPS via a rights issue exercise with free detachable warrants to be undertaken ( MNC Rights Issue ). The details of the MNC Rights Issue have yet to be determined. The relevant information of the MNC Rights Issue will be announced as and when they are determined by the Board. 2.2 Information on SPNB Dana and SPNB Information on SPNB Dana SPNB Dana was incorporated as private limited company on 1 April SPNB Dana is a whollyowned subsidiary of SPNB which is principally involved in the sourcing for financial aid from banks and other financial institutions to fund the housing development projects undertaken by the SPNB Group. The funds are also used to provide financing to home buyers of Rumah Idaman Mesra Rakyat 1 Malaysia Scheme ( RMR1M ) as well as homebuyers who face difficulties in securing a bank loan. SPNB Dana is licensed under the Money Lending Act 1951 to carry out money lending activities. As at the date of this announcement, the Board of Directors of SPNB Dana are Wan Omar bin Wan Abdul Ghani, Datuk Ahmad Azizi bin Haji Ali, Dato Dr Mohd Fadzin bin Hashim and Ahri bin Hashim Information on SPNB SPNB was incorporated as public company on 21 August SPNB is wholly-owned by the Malaysian Government and is under the supervision of the Ministry of Finance, Malaysia. SPNB Group is principally involved in developing affordable homes though programmes such as Rumah Mampu Milik and the Program Mesra Rakyat. As at the date of this announcement, the Board of Directors of SPNB are Datuk Dr Haji Abdul Latiff bin Ahmad, Dato Dr Mohammad, Padzil bin Hashim, Datuk Seri Ahmad bin Haji Kabit, Wan Omar bin Wan Abdul Ghani, Hassan bin Ibrahim, Ahri bin Hashim, Fairuz Karini binti Ahmad, Salwani binti Abdullah, Datuk Abdul Hamid bin Abu Bakar, Dato Siti Fatimah binti Daud and Datuk Mohamed Hasnan bin Che Hussin. 2.3 Salient terms of the SSA (i) Conditions precedent The Proposed Joint Venture is subject to the following conditions precedent having been fulfilled or obtained or waived in accordance with the SSA within 9 months from the date of the SSA, or such other extended date as may be mutually agreed upon between the parties: 2

3 (a) (c) the incorporation of the SPV; the approval of the shareholders of MNC at an extraordinary general meeting to be convened in respect of the establishment of the Proposed Joint Venture in accordance with the terms and conditions stated in the SSA and the MNC Rights Issue to raise up to RM20,000,000 in proceeds for the purpose of allowing MNC to subscribe for the RPS in accordance with the terms of the SSA; and completion of the MNC Rights Issue. (collectively, Conditions Precedent ). (ii) Subscription of the RPS Within 60 days following the date upon which all the Conditions Precedent have been satisfied, MNC shall subscribe for up to 20,000,000 RPS in the SPV at a total subscription price of RM20,000,000, subject to a minimum of 10,000,000 RPS and the SPV shall allot and issue such RPS to MNC. The subscription price for the RPS shall be utilised as Advances to SPNB Dana as set out in Section 2.3(iii) below. The indicative salient terms of the RPS are as follows: Issuer Issue Price Issue Size Tenure Transferability Dividend Liquidation Preference/ Repayment of Capital Redemption : SPV : RM1.00 per RPS. : Up to RM20,000,000 in nominal value. : Perpetuity commencing from and inclusive of the issuance date, unless otherwise redeemed. : Subject to the constitution of the SPV, the RPS shall not be transferable. : The RPS shall carry the right to receive a preferential fixed cumulative dividend at the rate of 5.0% per annum ( Fixed Dividend ) on the Issue Price. The Fixed Dividend shall accrue and be payable annually, in priority to the accrual and payment of any dividend to the holders of ordinary shares and other classes of preference shares issued by the SPV. : In the event of the liquidation or winding-up of the SPV, the redemption value of the RPS not previously redeemed and all arrears of preferential dividend declared and accrued up to the date of commencement of the winding-up shall be paid in priority to any payment to the holders of ordinary shares and other classes of preference shares issued by the SPV but there shall be no further or other participation in the profits or assets of the SPV. : The RPS may be redeemed at the option of the holder(s) of the RPS ( RPS Holder ) or the SPV at any time within a period 6 th months after the 5th anniversary of the date of issue of the RPS, in 3

4 accordance with the following provisions: (a) the RPS Holder or the SPV may at any time give prior notice in writing ( redemption notice ) of its intention to require redemption or to redeem (as the case may be) all or any part of the RPS which are fully paid up on the date specified in the redemption notice; if the RPS Holder or the SPV decides to require redemption or to redeem (as the case may be) a part only of the RPS, those to be redeemed shall be a rateable proportion (as nearly as practicable without involving fractions of shares) of each holding of such RPS on the redemption date; (c) on the redemption date, the SPV shall redeem the RPS specified in the redemption notice at the Redemption Price and pay the dividend which has accrued on them (whether declared or earned or not) down to the redemption date against delivery to the SPV of the certificates for the RPS to be redeemed and shall issue free of charge fresh certificates for any unredeemed RPS; (d) the RPS to be redeemed shall cease to rank for dividend on the redemption date unless on the certificates for the preference shares being tendered, the SPV fails to effect such redemption; and (e) the SPV shall comply with all the provisions of the Companies Act 2016 relating to the redemption of the RPS and the creation or increase of a capital redemption reserve. Redemption Price Conversion Voting Rights : The RPS shall be redeemed at a redemption price of RM1.00 per RPS. : Not applicable. : The RPS shall not confer on the holders thereof the right to vote in either in person or by proxy at any general meeting of the SPV unless: (a) at the date of the notice convening the meeting any dividend on the RPS has been declared but remains unpaid for more than 30 days; or the business of such meeting is or includes the consideration of a resolution relating to any of the following: (i) any increase, reduction, amalgamation, sub-division or other alteration to the share capital of the SPV or any rights or privileges attached to any shares or class of shares or upper limit of total loan capital; 4

5 (ii) (iii) (iv) (v) (vi) admission of any shareholder(s) into the SPV by the allotment of new shares or convertible securities in the SPV; any redemption, purchase or cancellation of any shares in the SPV; the winding-up of the SPV; any abrogation or variation or otherwise directly affecting the special rights and privileges attaching to the RPS; the creation of any new class of redeemable preference shares ranking in priority to or pari passu with the RPS in issue unless the RPS Holder consent thereto in writing; or (vii) any proposal for the disposal of the whole of SPV s property, business and undertaking except for in the ordinary course of business. Where the RPS Holder are entitled to vote at any general meeting, every RPS shall on a poll, carry 1 vote for every RM1.00 paid up on each such RPS and every ordinary share shall, notwithstanding any other provision of constitution of the SPV, carry one vote for every RM1.00 paid up on each such share. The RPS Holder shall be entitled to receive notices, reports and accounts (including balance sheets and profit and loss accounts) and attend meetings of which holders of ordinary shares in the capital of the SPV are entitled. Ranking Status : The RPS will rank on par among themselves in all respects and in priority (including in respect of dividend payable) to the SPV Shares and any other preference shares issued from time to time subsequent to the issuance of the RPS, but after all secured obligations of the SPV. : Unlisted 5

6 (iii) Advances to SPNB Dana The SPV shall make available the Advances to SPNB Dana on the following terms: Purpose Manner of repayment Profit rate : The Advances shall be utilised by SPNB Dana for the purpose of providing short-term loans of down-payments and/or differential sums for the eligible homebuyers for housing developments developed by the SPNB Group and/or such other purposes deemed appropriate by the parties. : Principal and Profit to be repaid on an annual basis. : The profit payable on the Advances (comprising all income derived from the financing granted to homebuyers and bank interest accrued on the unutilised portion of the Advances less operational costs and expenditures incurred in connection with such financing such as sales and administrative expenses) shall be equivalent to the amount of profit payable on the short-term financing that SPNB Dana grants to homebuyers and other income (including bank fixed deposit income) deposited by SPNB Dana from the Advances placed with it. Profit shall be paid to the SPV on a yearly basis. Pending utilisation of Advances by SPNB Dana, all Advances shall be placed by SPNB Dana in an interest-bearing account and all interest accrued shall form part of the profit and be paid to the SPV on a yearly basis. Similarly, all profit accrued which is pending payment by SPNB Dana to the SPV shall be placed in an interest-bearing account and all interest accrued shall be paid to the SPV on a yearly basis together with the payment of profit. Tenure : Renewable annually and repayable on demand at any time after the date falling 5 years after the date of first disbursement of the Advances. SPNB Dana shall pay to the Company the profit payable on the Advances within 14 business days from the last day of each financial year of the Company. (iv) Profit sharing Distributable profits arising from the Business will be distributed between SPNB Dana and MNC via dividends paid to ordinary shareholders of the Company in accordance with the shareholdings ratio (i.e. 70% SPNB Dana and 30% MNC), after the dividend payable on the RPS has been settled. Distributable profits will be paid on a yearly basis, within not less than 6 months after the end of each financial year of the SPV. 6

7 (v) Financing principles Financing for the SPV subsequent to the RPS referred to in Section 2.3(ii) above shall be obtained from the following sources and in the following order of priority: (a) Financing from banks and financial institutions on the most favourable terms reasonably obtainable as to the financier s interest rate margin, repayment and security, but without allowing a prospective financier a right to participate in the share capital of the SPV as a condition of making available the financing. Any other source of financing to be mutually agreed by MNC and SPNB Dana. (vi) Board structure and composition Composition of the Board of Directors of the SPV (a) At all times while the SSA remains in force, MNC and SPNB Dana shall procure that at any one time, unless otherwise expressly agreed by MNC and SPNB Dana, the number of Directors of the SPV shall not be more than 3 in number. Except as otherwise provided in the SSA: (1) SPNB Dana will, while it remains a shareholder of the SPV, be entitled to nominate and appoint 2 Directors; and (2) MNC will, while it remains a shareholder, be entitled to nominate and appoint 1 Director, and each director shall hold office for such term as may be determined by that shareholder who appointed him/her. Voting and board resolution (a) The quorum for any meeting of the Board shall consist of a minimum of 2 Directors (or their respective alternates) with at least one director nominated by each shareholder present at the time when the relevant business is considered. (c) Save for the board reserved matters set out in the SSA, questions arising at any meeting of the board of directors of the SPV shall be decided by a majority of votes of the Directors present at that meeting with at least a Director appointed by SPNB Dana and a Director appointed by MNC present at the time of voting. A resolution in writing or copies thereof signed or approved by letter or fax or other form of permanent visible communication by all the Directors of the board of directors of the SPV, whether or not in Malaysia, will be as valid and effectual as if it had been passed at a meeting of the board duly convened and held, and any such resolution may be in counterparts signed by one or more of the Directors. 7

8 Chairman (a) The chairman of the board of directors of the SPV and any shareholders meetings ( Chairman ) will be a Director nominated by SPNB Dana from time to time. The Chairman shall chair the meetings of the board of directors of the SPV and any shareholders meetings and shall not be entitled to exercise any casting vote. 2.4 Eventual issued share capital and basis of subscription consideration The parties have agreed that the SPV shall have an initial capital of RM1,000,000 comprising 1,000,000 SPV Shares at an issue price of RM1.00 each to be held in accordance with the shareholding ratio. The subscription of up to 20,000,000 RPS by MNC for a maximum consideration of RM20,000,000 is based on the required funding by SPNB Dana to provide short-term loans for down-payments and/or differential sum for eligible homebuyers of housing developments. 2.5 Source of funding The source of funding by MNC for the Proposed Joint Venture shall be as follows: (i) (ii) The funding of RM300,000 for the subscription of 300,000 SPV Shares shall be funded via the Company s internally generated funds; and The funding of up to RM20,000,00 for the subscription of RPS shall be funded via the MNC Rights Issue. The relevant information on of the fund raising exercise will be announced as and when they are determined by the Board. 2.6 Liabilities to be assumed and estimated financial commitments pursuant to the Proposed Joint Venture Save for the obligation to subscribe for the ordinary shares and RPS of SPV, MNC will not assume any additional liabilities (including contingent liabilities and guarantees, if any) under the Proposed Joint Venture. 3. RATIONALE The MNC Group is a specialised digital technology solution provider, which is principally involved in the development of information and communication technology solutions, mobile application, social media applications development and management, mobile messaging platform and mobile billing platform. The Proposed Joint Venture enables MNC to facilitiate SPNB Dana to undertake and develop the business of providing short-term loans for down-payments and/or differential sum for eligible homebuyers of housing developments under SPNB Group via the SPV. In return for MNC s participation in the Proposed Joint Venture, MNC will be given the opportunity to be appointed as the technology solution partner for SPNB Dana to develop, among others an inclusive mobile application and website technology platform which will comprise a business-tobusiness focused platform for companies operating within the SPNB Group. 8

9 The Proposed Joint Venture is intended to open business opportunities for the Group to offer its core technology solution services to SPNB Dana which in turn is expected to expand its clientele into the Government-linked sector. The Board also believes that the SSA will grant MNC with the opportunity to benefit from the potential cash flows from dividends of 5.0% per annum arising from the RPS subscribed in the SPV as well as the profit contribution from the Business based on MNC s shareholding proportion in the SPV. (Source: Management of MNC) 4. RISK FACTORS The risk factors in relation to the Proposed Joint Venture (which are non-exhaustive) are set out below. There can be no assurance that any changes in relation to the risk factors as described below will not have a material adverse effect on the business, operations and financial performance of the MNC Group. 4.1 The MNC Group will be exposed to new business risks Under the Proposed Joint Venture, the Group will be exposed to certain risks inherent in the business of short term financing for affordable housing. These risks include but are not limited to changes in the general economic conditions, changes in the property market conditions, changes in demand and supply of residential properties, and changes in credit and interest rate levels. The Board believes that the Proposed Joint Venture allows the SPV to leverage on the experience and competences of SPNB Dana in addressing such new business risks. However there can be no assurance that the experiences and efforts of the management of the SPV will be adequate to address the risks inherent to the business of short term financing for affordable housing (particularly in the event of default by the borrowers and ability of SPNB Dana to recover the value of its loan). Notwithstanding the above, the MNC Group is exposed to such new business risks to the extent to its 30% equity interest in the SPV and investment in RPS in the SPV. 4.2 Transaction risk The Proposed Joint Venture is subject to the risk of non-completion of the SSA. The completion of the Proposed Joint Venture is conditional upon the fulfilment of the conditions precedent in the SSA. There can be no assurance that the Proposed Joint Venture will not be exposed to risks such as the inability to obtain the approvals from the relevant parties and/or inability to comply with the conditions imposed by the relevant authorities, if any. However, MNC will take and continue to take all reasonable steps to ensure satisfaction and/or waiver, as the case maybe, to ensure completion of the Proposed Joint Venture. 5. PROSPECTS OF THE PROPOSED JOINT VENTURE The Government has committed to playing a major role in meeting the housing needs for targeted groups in urban and rural areas by continuing successful existing programmes, that include programmes under the Program Bantuan Rumah ( PBR ) for the poor, and programmes for low-income and middle-income households such as the Rumah Mesra Rakyat 1Malaysia ( RMR1M ), Program Perumahan Rakyat ( PPR ), Perumahan Rakyat 1Malaysia ( PR1MA ), and 9

10 1Malaysia Civil Servants Housing ( PPA1M ), as well as programmes for second-generation Federal Land Development Authority (FELDA) and FELCRA Berhad (FELCRA) settlers. Financing schemes such as My First Home Scheme, Youth Housing Scheme and MyHome will also be enhanced to improve access and affordability for low-income and middle-income households. The prospects for SPV will be supported by the overall growth in the demand for residential properties, where the shrinking size of households, combined with continued growth in incomes and population, as well as rapid urbanisation, are expected to remain as important drivers of the overall demand for residential properties, especially in major urban areas. Barring any unforeseen circumstances, the Board after having considered the above-mentioned prospects is optimistic of the Group s performance moving forward. 6. EFFECTS OF THE PROPOSED JOINT VENTURE The Proposed Joint Venture will have no material effect to the earnings per share, net assets per share, gearing, share capital and the substantial shareholders shareholdings of the Company for the financial year ending 31 December It is the intention of the Company to undertake the MNC Rights Issue to raise funds amounting to RM20,000,000 for the subscription of the RPS. The subscription of RPS is expected to contribute positively to the earnings and EPS of the Group for the ensuing financial years in view of the fixed cumulative dividend to be received annually. The effects of the MNC Rights Issue to be undertaken on the earnings per share, net assets per share, gearing, share capital and the substantial shareholders shareholdings will be announced as and when they are determined by the Board. 7. OTHER INFORMATION REQUIRED UNDER THE LISTING REQUIREMENTS The highest percentage ratio applicable to the Proposed Joint Venture under Rule 10.02(g) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad is 59.55% which is the total consideration amounting to RM20,300,000 (for the subscription of SPV Shares and RPS) compared against net assets of the MNC Group as at 31 December 2016 of RM34,087, APPROVALS REQUIRED The Proposed Joint Venture is subject to the approvals and/or consents being obtained from the following: (a) Shareholders of MNC at an extraordinary general meeting to be convened; and Any other relevant authorities and/or parties, if required. Save for the MNC Rights Issue to be undertaken, the Proposed Joint Venture are not conditional upon any other corporate exercise/scheme undertaken or to be undertaken by MNC, if any. 10

11 9. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED None of the Directors, major shareholders of MNC and/or persons connected with them has any interests, direct or indirect in the Proposed Joint Venture. 10. DIRECTORS STATEMENT After considering all aspects of the Proposed Joint Venture, including the capital structure, rationale and benefit, and financial effects for the Proposed Joint Venture, the Board is of the opinion that the Proposed Joint Venture is in the best interest of the MNC Group and its shareholders. 11. ESTIMATED TIME FRAME FOR COMPLETION AND APPLICATIONS TO THE RELEVANT AUTHORITIES Barring any unforeseen circumstances, the Proposed Joint Venture is expected to be completed in the second quarter of ADVISER M&A Securities Sdn Bhd has been appointed as the adviser for the Proposed Joint Venture. 13. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the SSA can be inspected at MNC s registered office at 10 th Floor, Menara Hap Seng, No. 1 & 3, Jalan P. Ramlee, Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement. This announcement is dated 24 October