- Translation - Information Memorandum on Acquisition of Assets

Transcription

1 - Translation - Information Memorandum on Acquisition of Assets The meeting of Vintage Engineering Public Company Limited s ( the Company or VTE ) Board of Directors No. 14/2012, held on 21 December 2012, approved the acquisition of 13,767 shares of PTSunhub Mining International ( SMI ), with a par value of IDR 100,000 per share (or approximately USD 10.33), or 25% of SMI s current paid-up capital, from Worldly Wealth International Limited ( WWI ) at the price of THB 43,580 per share, total amount of the transaction is THB 599,965,860. The Company will pay for the shares in accordance with the details set out in item 8 of this document. However, the Company and/or WWI are required to complete all the processes and condition precedents as specified in the Memorandum of Understanding dated 21 December 2012, as shown in item 3.3, and/or the Share Purchase Agreement, which has to be agreed upon in the future. In addition, this Board of Directors meeting also resolved to propose this transaction to a shareholders meeting for approval. This transaction is considered as an acquisition of assets according to the Notification of the Capital Market Supervisory Board No. TorChor 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets, and the Notification of SET s Board of Governors Re: The Disclosure and Best Practice of Listed Companies in Acquisition or Disposal of Assets B.E ( Notification on acquisition or disposal of asset ).The maximum size of the transaction is equal to 81.99% of the Company s consolidated total assets as at 30 September 2012, which is considered a type 1 transaction according to the Notification on acquisition or disposal of asset between a listed company and another non-listed company with a transaction size of 50% or higher, but lower than 100%. The Company, therefore, is required to disclose the information related to the transaction to SET and seek an approval from a shareholders meeting with no less than 3/4 of the votes from shareholders attending the meeting and eligible for casting votes. Shareholders with conflict of interests are not allowed to vote on this agenda. Furthermore, the Company will distribute meeting invitations, with opinion from the independent financial advisor, to all shareholders at least 14 days prior to the shareholders meeting date. The meeting of the Company s Board of Directors passed a resolution to propose to the extraordinary general meeting of shareholders no. 1/2013, to be held 8 March 2013, to approve the transaction. Rationale and Necessity of the Transaction The Company has a policy to expand its business in order to maintain its growth and lower the risk of relying on service income from engineering contracts only, even though its revenue from service income from engineering contracts has continuously increased. For the past 12 months ended 30 June 2012, revenue from engineering contracts amounted to THB million, an increase of 20% compared to the same period of However, gross profit margin in 2012 was lower than prior year (13.72% vs %) due to higher labor costs and lack of labor as well as the flood crisis during the end of Therefore, the Board of Directors set out a growth strategy of the Company by investing in a business that has future growth potential.

2 The Company established a new subsidiary, named World Max Management Limited ( Worldmax ), which was registered in the British Virgin Islands to invest in other businesses and generate returns from overseas to the shareholders. Subsequently, SMI, whose business is to manage and operate a coal mine in Kalimantan, Indonesia, had appointed Worldmax to be its sole distributor. The board of directors and management of the Company foresaw that this was a great opportunity for the Company to expand its business into the energy sector, which has the potential to generate future returns. The management of the Company started negotiations with SMI s shareholder to buy shares in SMI in order to gain direct returns from profits that SMI will generate from the sale of coal, apart from revenue that Worldmax generated from the distribution of coal. Therefore, the Board of Directors of the Company considered and approved the Company to acquire SMI s shares from WWI. As a result, the Company will have other sources of income in addition to service income from engineering contracts, and be able to lower the risk from relying only on income from engineering contracts. Besides, the Company will be able to increase return to the shareholders derived from a profit of coal mine business. Information on the Transaction (1) Date of the Transaction The Company will acquire SMI s shares from WWI after the Company s shareholders approve the transaction at Extraordinary General Meeting of shareholders no. 1/2013, to be held on 8 March 2013, and the condition precedents in the MOU dated 21 December 2012 and Share Purchase Agreement, which has yet to be signed, are satisfied. The Company expects the transaction to be completed within the second quarter of (2) Parties Involved and Relationship with the Company Seller : Worldly Wealth International Limited Buyer : Vintage Engineering Public Company Limited Relationship : None Information of Worldly Waelth International Limited WWI was incorporated on 10 April 2012 under the BVI Business Companies Act of British Virgin Islands. WWI is authorized to issue 50,000 shares with a par value of USD 1 each. As at 19 June 2012, the paid-up capital of WWI was of USD 1 consisted of 1 share with the par value of USD 1 each. The registered address is at Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands, and the contact address is at No. 114, Green Road, 93400, Kuching, Sarawak, Malaysia Shareholder of WWI as at 19 June 2012 is as follows. Name No. of shares held % of paid-up capital 1. Mr. Richard Wong Shoon Fook Total Board of directors of WWI as at 19 June 2012 consisted of: Name Position 1. Mr. Richard Wong Shoon Fook Director หน าท 2

3 WWI was founded with the objective to be an investment company. Currently, WWI holds shares in SMI in the amount of 28,085 shares or equivalent to 51% of SMI s current paid-up capital. (3) The general characteristic of the transaction, total value of the consideration and details of the acquired asset 3.1 General Characteristics of the Transactio The Company plans to acquire 13,767 shares of SMI with a par value of IDR 100,000 (or approximately USD 10.33), or 25% of SMI s current paid-up capital at the price of THB 43,580 per share. Total value of the transaction is THB 599,965,860 in total. 3.2 Total Value of the Consideration The acquisition of 13,767 SMI shares, or equivalent to 25% of its current paid-up capital, totaling of THB 599,965,860 is classified as as a Type 1 transaction, a transaction between a listed companies or their subsidiaries with a non-listed company. The transaction size is equal to 81.99% of consolidated total assets of the Company as at 30 September 2012, which is the maximum size according to the Total Value of Compensation criteria. According to the Notification, the transaction is higher than 50% but lower than 100%. Criteria Calculation Transaction Size 1. Net Tangible Assets Non applicable as NTA of SMI is negative. 2. Net Profit Non applicable as SMI generates an operating loss. 3. Total Value of Compensation [THB million / THB million] x 100% 81.99% 4. Value of Security [58,000,000 shares / 173,700,000 shares] x 100% 33.39% Therefore, the Company is required to disclose the information on the transaction to SET and seek an approval from the shareholders meeting by receiving at least 3/4 of total votes from shareholders attending the meeting and having the voting rights, excluding all shareholders with conflict of interests. The Company will send out all shareholders meeting invitations, together with an opinion of an independent financial advisor, at least 14 days prior to the shareholders meeting date. Furthermore, the meeting of the Board of Directors passed a resolution to propose this transaction for approval at the Extraordinary General Meeting of the Shareholders no. 1/2013, to be held on 8 March Summary of the Memorandum of Understanding dated 21 December 2012 Buyer Seller Acquiring shares Conditions Precedent for the Transaction Term of Payment Vintage Engineering Public Company Limited Worldly Wealth International Limited 13,767 shares of PT Sunhub Mining International 1. all necessary board and shareholder resolutions being obtained from each of the party 2. all the fund being obtained by VTE from its capital increase by way of right offering to its existing shareholders and/or private placement in full, to enable VTE to have sufficient cash to enter into the Share Acquisition 3. Due Diligence of TAM and SMI being required to be satisfied by VTE upon or before the completion Please see details in Number(5) หน าท 3

4 (4) Acquired Assets 4.1 Company name : PT Sunhub Mining International 4.2 Date of registration : 27 September Head office : Ruko Mutiara Taman Palem Blok C.2 No. 22, Cengkareng, Jakarta Barat Indonesia 4.4 Registered and paid-up capital : IDR 5,506,800,000 (or approximatelyusd 600,000) 4.5 No. of shares acquired : 55,068 shares 4.6 Par value : IDR 100, Related party to VTE and % holding of such party : none. Prior to the Transaction, the Company holds no share in SMI 4.8 No. of shares acquired : 13,767 shares 4.9 % of share held after the acquisition : 25.00% of SMI s paid-up capital 4.10 List of shareholders as at 14 November 2012 Fist name Last name / Company No. of shares Registered and paid-up capital (IDR) % holding Worldly Wealth International 28,085 2,808,500,000 (USD 306,000) 51 Yap ChianThiah 15,969 1,596,900,000 (USD 174,000) 29 Yi Yamin 11,014 1,101,400,000 (USD 120,000) 20 Total 55,068 5,506,800,000 (USD 600,000) 100 List of shareholders after this transaction and the capital increase in the future is as follow; Fist name Last name / Company No. of shares Registered and paid-up capital (IDR) % holding Worldly Wealth International 14,318 1,431,800,000 (USD 156,000) 26 The Company 13,767 1,376,700,000 (USD 150,000) 25 Yap ChianThiah 15,969 1,596,900,000 (USD 174,000) 29 Yi Yamin 11,014 1,101,400,000 (USD 120,000) 20 Total 55,068 5,506,800,000 (USD 600,000) Board of Directors of SMI as at 5 June 2012 Board Of Commisioners Name Lastname Position 1. Yap ChianThiah President Commissioner 2. Andy Khouw Commissioner Board Of Director Name Lastname Position 1. Julius President Director 2. Yi Ya Min Director 3. Lin Liang Hui Director หน าท 4

5 4.11 Type of business SMI was established under the Indonesian law to operate a mine operation business, including drilling, transportation, and marketing both domestically and internationally. SMI entered into a Management Cooperation Agreement and Sale and Purchase of Coal Agreement (Offtake) with PT TadjahanAntang Mineral ( TAM ), which was established under the Indonesian law and granted a mine concession from the Indonesian government (Operation Production Stage Mining Business License) No. 17/DPE/I/2010. The Management Cooperation Agreement and Sale and Purchase of Coal Agreement (Offtake) gives SMI the sole right to operate TAM s mine and to support additional mining activities. SMI, therefore, has appointed Worldmax, a subsidiary of VTE, to be the sole agent for selling coal. Detail of the agreements can be summarized as follows Cooperation Agreement Parties Date Duration of the Agreement Summary of key points SMI and TAM 25 October years since the signing of this Agreement or the duration of the validity of Operation Production Stage Mining Business License No. 17/DPE/IX/2010 and may be renewed and or extended based on the agreement of the Parties The Parties agreed to create management cooperation for management and operation of TAM Coal Mine based on Operation Production Stage Mining Business License No. 17/DPE/IX/2010, whereas SMI shall fund all business activities of Coal Mining Operation Production Stage Mining Business License No. 17/DPE/IX/2010 and; TAM shall assign full supervision and authority exclusively and irrevocably to SMI to supervise, create and determine every action and or matters without exception in relation to the management and operation of business activities in Operation Production Stage Mining Business License No. 17/DPE/IX/2010. Also, TAM undertakes and agrees that it shall not offer and or accept any offers from any party, cooperation in any form including but not limited to entering into a cooperation agreement, profit sharing agreement and or any other agreements with any other party in relation to Operation Production Stage Mining Business License No. 17/DPE/IX/2010, without a written consent from SMI Off-take Agreement Parties Dated Duration of the Agreement SMI and TAM 25 October years since the signing of this Agreement or the duration of the validity of Operation หน าท 5

6 Summary of key points Production Stage Mining Business LicenseNo. 17/DPE/IX/2010 and may be renewed and or extended based on the agreement of the Parties Both parties agree that TAM shall supply and sell all coal resources contained in Coal Mine under Operation Production Stage Mining Business License No. 17/DPE/IX/2010 only to SMI throughout the validity of this Agreement. Also, TAM hereby undertakes that it shall not offer such exclusive right to any party and/or similar rights to it to other party except for SMI and; SMI is the holder of the exclusive right to purchase and offtake coal resources contained in Coal Mining under Operation Production Stage Mining Business License No. 17/DPE/IX/2010 throughout the validity of this Agreement. Exclusive right to purchase and offtake coal resources granted to SMI shall be irrevocable and bind the Parties throughout the validity of this Agreement. Summary Information about TAM s Coal Mine License Type of Mining Location Area Stripping Ratio Coal Estimates Distance from mine to jetty IUP Operation Production No. 17/DPE/IX/2010 with 9 years duration starting from 3 September 2010 Open Pit Village : TumbangTambirah, District : Kurun, Regency : Gunung Mas, Province : Central Kalimantan The mine site is located approximately 120 km north of Palangkaraya, the capital city of Central Kalimantan Hectares : 1 Pending JORC report 11 Kilometers Quality of Coal Parameter Unit Result Method Ash (Aad) % 3.87 GB/T Volatile Matter (Vad) % GB/T Inherent Moisture (Mad) % 5.69 GB/T Total Moisture (Mt) % GB/T Fixed Carbon (FCad) % GB/T Gross Calorific Value (Qgr, ad) Cal/g 6859 GB/T Net Calorific Value (Qnet,ad) Cal/g 6551 GB/T Sulfur (S) % 0.66 หน าท 6

7 A pilot run operation commenced in early July to assess the quality and quantity of coal. Currently, the site has 1 set of excavating machinery which includes 6 bulldozers and 10 trucks with monthly capacity of 30,000 metric tons 4.13 Financial Information Highlights of SMI s financial information extracted from the audited financial statements for the period ended 30 September 2012 and 31 December 2011 are shown in the table below. (Unit:IDR) 30 Sep12 31 Dec 11 Balance Sheet Assets Cash and banks 1,216,312,266 72,977,945 Non trade receivable 16,329,015,100 15,936,700,000 Fixed assets net 27,125,841,272 25,879,020,519 Receivable to related parties 5,506,800,000 5,506,800,000 Total assets 50,177,968,638 47,395,498,464 Liabilities and Capital Deficiencies Accrued expense 7,854,744,774 2,762,193,670 Non trade payable 1,643,351, ,836,000 Loan from related party 83,162,537,401 56,049,776,940 Total Liablities 92,660,633,375 59,227,806,610 Capital Deficiencies Share capital - Authorised - 55,068 shares of par value Rp 100,000 per share 5,506,800,000 5,506,800,000 Deficit (47,989,464,736) (17,339,108,145) Total Capital Deficiencies (42,482,664,736) (11,832,308,145) Total Liabilities and Capital Deficiencies 50,177,968,638 47,395,498,464 Income Statement Revenue - - Operating loss (25,557,805,487) (14,576,914,476) Net Loss (30,650,356,591) (17,339,108,146) Remark: SMI s financial statements were audited by ACHMAD, RASYID, HISBULLAH & JERRY Registered Public Accountants Member of Nozaka Japan Certified Public Accountant Firm 4.14 Information on TAM who owns Operation Production Mining Business License หน าท 7

8 TAM was established on 24 April 2008 under the Indonesian law, with a registered capital of IDR 1 billion, consisting of 10,000,000 shares with a par value of IDR 100 each. As of 19 October 2009, TAM had a paid-up capital of IDR 250 million, consisting of 2,500,000 shares with a par value of IDR 100 each. List of shareholders of TAM as at 19 October 2009 Shareholder No. of shares % of paid-up capital 1. Mr. Harmoko 625, Mr. Yantono 1,250, Mrs. Tan Rika Hadisubroto 625, Total 2,500, Board of directors of TAM as at 19 October 2009 Board of Commissioner Position 1. Mrs. Tan Rika Hadisubroto Commissioner Board of Director Position 1. Harmoko President Director 2. Yantono Director TAM owns Operation Production Stage Mining Business License No.17/DPE/IX/2010, dated 3 September 2010, granting it to construct, produce, transport, and sell, as well as conduct activities related to transforming and distilling mineral ore within a designated area for 9 years. The permission is extendable twice and effective from 3 September (5) Total Value of Compensation,Value of the Acquired Asset, Criteria to Determine the Value of Compensation, and Term of Payment The Company will enter into the transaction to acquire SMI shares, with total value of THB 599,965,860, upon receiving approval from the extraordinary shareholders meeting No. 1/2013, to be held on 8 March 2013 and all condition precedents agreed upon between the Company and WWI are met. The source of funding for the shares acquired are 1) cash raised from newly issued shares offered to existing shareholders in a right issue transaction and/or a private placement in the amount of THB 278,065,860, and 2) the Company s newly issued shares of 58,000,000 shares with a par value of THB 1 each at an offering price of THB 5.55 per share, totaling THB 321,900,000 to WWI in exchange for SMI shares (Share Swap). The share swap ratio will equal to 7, newly issued shares of the Company to 1 share of SMI. The offering price is not classified as the offer of newly issued share at low price, according to the Notification of Capital Market Supervisory Board No. ThorJor 28/2551, Re: the request for and the grant of permission to issue new shares and the Notification of the Securities and Exchange Commission ( SEC ) No. SorJor 39/2551, Re: the calculation of the offering price and the determination of market price for the issuance of new share at a low price. (The weighted average price of the Company s share on SET 15 consecutive working days prior to the Board meeting No. 14/2012, held on 21 หน าท 8

9 December 2012, was THB 6.13 per share.) Total value of compensation for the purchase of SMI shares is THB 599,965,860, which has been agreed upon between the buyer and the seller and derived from the coal estimates of not less than 20 metric tons according to Report prepared by PT Geollabs Inti Mining. Summary of the Payment Term Upon receiving approval from the extraordinary meeting of the shareholders No. 1/2013 and all condition precedents have been met, the Company and WWI agree on the following payment term. 1) The Company will transfer the money received from the issuance of new shares to existing shareholders and/or private investor within 2 days after receiving the proceeds from such offering. 2) WWI will start transferring all 13,767 of SMI shares shares to the Company under all relevant laws and regulations immediately after receiving the money in 1). WWI will use its best effort to complete the transferring of all SMI shares to the Company within 14 days after WWI have received the proceeds. 3) The Company will register the change in its paid-up capital from the swap of newly issued shares with SMI shares ensuing WWI as the Company s shareholder within 1 working day after the Company received all 13,767 of SMI shares] shares, under all relevant laws and regulations together with all necessary documents for the share register. (6) Source of Fund for Acquisition of Asset and Detail of Securities Issuance For the purchase of 13,767 shares of SMI or 25% of SMI s paid-up capital at a price of THB 43,580 per share (total value of THB 599,965,860), the Company s source of fund will be from the followings. 1. The Company will pay for SMI shares partly in cash of THB 280,965,860 raised from the issuance of new ordinary shares of the Company to existing shareholders and/or private investor, and 2. The Company will issue 58,000,000 new ordinary shares of the Company with a par value of THB 1 each at a price of THB 5.50 per share to WWI for SMI shares instead of cash. The swap ratio of the Company s share with SMI share will equal to 7, newly issued shares of the Company to 1 SMI share. The offering price is not classified as the issuance of new share at a low price, accordingto the Notification of the Securities and Exchange Commission No. SorJor 39/2551, Re: the calculation of the offering price and the determination of market price for the issuance of new share at a low price. (The weighted average price of the Company s share on SET 15 consecutive working days prior to the Board meeting No. 14/2012, held on 21 December 2012, was THB 6.13 per share.) (7) Condition for the Transaction The purchase of SMI shares from WWI is under the following conditions. The Extraordinary Shareholders Meeting No. 1/2013, to be held on 8 March 2013, approves the acquisition of the asset and other related transactions, as follows. หน าท 9

10 Agenda Acquisition of assets, SMI shares and acquisition of a private company according to section 107 of the Public Company Act B.E (including all amendments) Reduction of the Company s registered capital. Increase of the Company s registered capital. Change of Item 4. Of Memorandum of Association to be in line with the change in registered capital. The allocation of new ordinary shares from the increase in registered capital. Approval Criteria No less than ¾ of votes from shareholders attending the meeting and having the rights to vote, excluding shareholders with conflict of interests. No less than ¾ of votes from shareholders attending the meeting and having the rights to vote. No less than ¾ of votes from shareholders attending the meeting and having the rights to vote. No less than ¾ of votes from shareholders attending the meeting and having the rights to vote. Majority votes from shareholders attending the meeting and having the rights to vote. In addition, the purchase of SMI shares is under the Condition Precedents as detailed in item 3.3 above. The Company will execute the transaction after obtaining approval from the Extraordinary Meeting of Shareholders No. 1/2013, to be held on 8 March 2013, to acquire SMI shares and to issue new shares to existing shareholders and private investor, and completing all condition precedents specified in the MOU dated 21 December 2012 and/or Share Purchase Agreement (to be entered into). The Company expects to complete this transaction in the second quarter of Timeline and process for the transaction are as follows. Step Period 1. Extraordinary shareholders meeting No. 1/ March Enter into Share Purchase Agreement At least 30 days prior to step Allocation of newly issued shares to existing shareholders and/or private investors 4. The Company transfers money from the sale of newly issued shares of the Company to WWI 5. WWI starts transferring all 13,767 of SMI shares to the Company under relevant laws and regulations. As soon as possible after the Company obtains an approval from the extraordinary shareholders meeting to purchase SMI shares and other related issues. Within 2 working days after receiving proceeds from the sale of newly issued shares of the Company. Immediately after WWI receives money transfer in step The Company receives all 13,767 of SMI shares Within 14 working days after WWI starts transferring 13,767 of SMI shares to the Company. (8) Benefits to the Company from the Transaction (1) Reduce the risk from depending solely on system engineering business. (2) Higher return from investment in coal business, in addition to being a distributor of coal under Worldmax. (3) Enhance future business opportunity, if the Company has a policy to expand into energy business, by building on top of experience from coal business. (4) Return profit from investment in coal business to the Company s shareholders. หน าท 10

11 (5) Enhance value of the Company by investing in businesses with sustainable growth of revenue and profit. (6) Stronger capital structure. As of 30 September 2012, the Company s debt to equity ratio was Upon the completion of this RO and PP transaction, the debt to equity ratio will decline. (11) Opinion of the Board of Directors on the Transaction The Board of Directors meeting No. 14/2012, held on 21 December 2012, passed a resolution to enter into the transaction as it would diversify the Company s sole dependence on system engineering business. It would also create value and return to the Company, which in turn benefits the shareholders. In addition, it would also provide the Company with future opportunity if it has a policy to expand into energy business. (12) Opinion of the Audit Committee on the Transaction No member of the Audit Committee has a different opinion from that of the Board of Directors. The Company certifies that information disclosed in this Information Memorandum is accurate and complete. Please be informed accordingly, Yours Sincerely, (Mr. Soraj Rojanabenjakul) Managing Director หน าท 11