IDIMENSION CONSOLIDATED BHD (Company No A) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 THIS CIRCULAR TO SHAREHOLDERS OF IDIMENSION CONSOLIDATED BHD ( IDIMENSION OR THE COMPANY ) IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional advisers immediately. This Circular has been reviewed and approved by Mercury Securities Sdn Bhd, as the Principal Adviser of idimension. Bursa Malaysia Securities Berhad ( Bursa Securities ) takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. Bursa Securities has not perused the contents of this Circular prior to its issuance. IDIMENSION CONSOLIDATED BHD (Company No A) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE:- PART A (I) (II) (III) (IV) PROPOSED ACQUISITION OF 20% EQUITY INTEREST IN IDB INTERACTIVE SDN BHD ( IDB ) FOR A TOTAL PURCHASE CONSIDERATION OF RM5 MILLION, TO BE SATISFIED VIA THE ISSUANCE OF 50,000,000 NEW ORDINARY SHARES OF RM0.10 EACH IN IDIMENSION ( IDIMENSION SHARES OR SHARES ) AT AN ISSUE PRICE OF RM0.10 PER SHARE ( PROPOSED ACQUISITION ); PROPOSED BONUS ISSUE OF 247,462,179 WARRANTS IN IDIMENSION ( WARRANTS ) ON THE BASIS OF ONE (1) WARRANT FOR EVERY TWO (2) EXISTING SHARES HELD BY ENTITLED SHAREHOLDERS ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ( ENTITLEMENT DATE ) ( PROPOSED BONUS ISSUE OF WARRANTS ); PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF IDIMENSION FROM RM50,000,000 COMPRISING 498,000,000 SHARES AND 20,000,000 REDEEMABLE CONVERTIBLE PREFERENCE SHARES OF RM0.01 EACH ( RCPS ) TO RM100,000,000 COMPRISING 998,000,000 SHARES AND 20,000,000 RCPS ( PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL ); AND PROPOSED AMENDMENT TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF IDIMENSION ( PROPOSED AMENDMENT ) (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) PART B INDEPENDENT ADVICE LETTER FROM AFFIN HWANG INVESTMENT BANK BERHAD (FORMERLY KNOWN AS HWANGDBS INVESTMENT BANK BERHAD) TO THE NON-INTERESTED SHAREHOLDERS OF IDIMENSION IN RELATION TO THE PROPOSED ACQUISITION AND NOTICE OF EXTRAORDINARY GENERAL MEETING Principal Adviser for Part A Independent Adviser for Part B Mercury Securities Sdn Bhd (Company No W) (A Participating Organisation of Bursa Malaysia Securities Berhad) Affin Hwang Investment Bank Berhad (Company No U) (Formerly known as HwangDBS Investment Bank Berhad) (A Participating Organisation of Bursa Malaysia Securities Berhad) The Notice of the Extraordinary General Meeting ( EGM ) of idimension to be held at Spring 1, Nilai Springs Resort, PT 4770, Nilai Springs, Putra Nilai, Negeri Sembilan Darul Khusus on Friday, 19 June 2015 at 2.30 p.m. is enclosed together with the Form of Proxy in this Circular. You are requested to complete, sign and return the enclosed Form of Proxy and deposit it at the Registered Office of the Company at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur on or before the time and date indicated below if you are not able to attend the EGM. The completion and lodging of the Form of Proxy shall not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last date and time for lodging the Form of Proxy Date and time of the EGM : Wednesday, 17 June 2015, 2.30 p.m. : Friday, 19 June 2015, 2.30 p.m. This Circular is dated 28 May 2015

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular:- Act - Companies Act, 1965 of Malaysia Affin Hwang IB or the Independent Adviser - Affin Hwang Investment Bank Berhad (formerly known as HwangDBS Investment Bank Berhad) (14389-U) Board - Board of Directors of idimension Bursa Depository - Bursa Malaysia Depository Sdn Bhd ( W) Bursa Securities - Bursa Malaysia Securities Berhad ( W) Circular - This circular in relation to the Proposals Consideration Shares - The 50,000,000 new idimension Shares to be issued at an issue price of RM0.10 per idimension Share pursuant to the Proposed Acquisition Deed Poll - The deed poll constituting the new Warrants to be executed by the Company in connection with the Proposed Bonus Issue of Warrants Director(s) - The director(s) of idimension as at LPD EClub Interactive - EClub Interactive Sdn. Bhd. ( M) EGM - Extraordinary general meeting Entitled Shareholders - The shareholders whose names appear in the Record of Depositors of the Company as at the close of business at 5.00 p.m. on the Entitlement Date in order to be entitled to the Warrants Entitlement Date - A date to be determined by the Board and announced later, on which the names of shareholders must appear in the Record of Depositors of the Company as at the close of business on that date in order to be entitled to the Warrants EPS - Earnings per Share FPE - The financial period ended FYE - The financial year ended / ending IAL - Independent Advice Letter prepared by the Independent Adviser ICT - Information and communications technology IDB - IDB Interactive Sdn. Bhd. ( X) IDB Shares - Ordinary shares of RM1.00 each in IDB idimension or the Company - idimension Consolidated Bhd ( A) idimension Group or the Group - idimension and its subsidiaries collectively Listing Requirements - The ACE Market Listing Requirements of Bursa Securities i

3 DEFINITIONS (CONT D) LPD - 13 May 2015, being the latest practicable date prior to the printing of this Circular LTD - 6 March 2015, being the last trading day prior to the date of the SPA Major Shareholder - A person who has an interest or interests in one (1) or more idimension Shares and the nominal amount of that share, or the aggregate of the nominal amounts of those idimension Shares, is:- (a) (b) 10% or more of the aggregate of the nominal amounts of all the voting shares in the Company; or 5% or more of the aggregate of the nominal amounts of all the voting shares in the corporation where such person is the largest shareholder of the Company Includes any person who is or was within the preceding six (6) months of the date on which the terms of the transaction were agreed upon, a major shareholder of idimension as defined under or any other corporation which is its subsidiary or holding company. For the purpose of this definition, interest in shares shall have the same meaning given in Section 6A of the Act Market Day(s) - A day on which Bursa Securities is open for trading in securities Mercury Securities or the Principal Adviser - Mercury Securities Sdn. Bhd. ( W) NA - Net assets Official List - The official list of the ACE Market of Bursa Securities Online E-Club or the Vendor - Online E-Club Management Sdn. Bhd. ( H) PAT - Profit after tax PBT - Profit before tax Previous Acquisition - The acquisition by idimension of 3,000,000 IDB Shares representing 60% equity interest in IDB, which was completed on 16 May 2014 Proposals - The Proposed Acquisition, Proposed Bonus Issue of Warrants, Proposed Increase in Authorised Share Capital and Proposed Amendment, collectively Proposed Acquisition - Proposed acquisition by idimension of 20% equity interest in IDB for a total purchase consideration of RM5 million, to be satisfied via the issuance of 50,000,000 Consideration Shares Proposed Amendment - Proposed amendment to the Memorandum and Articles of Association of the Company Proposed Bonus Issue of Warrants - Proposed bonus issue of 247,462,179 Warrants, on the basis of one (1) Warrant for every two (2) existing Shares held by Entitled Shareholders on the Entitlement Date ii

4 DEFINITIONS (CONT D) Proposed Increase in Authorised Share Capital - Proposed increase in the authorised share capital of idimension from RM50,000,000 comprising 498,000,000 Shares and 20,000,000 RCPS to RM100,000,000 comprising 998,000,000 Shares and 20,000,000 RCPS Purchase Consideration - The purchase consideration of RM5,000,000 for the purchase of the 20% equity interest in IDB in relation to the Proposed Acquisition RCPS - Redeemable convertible preference shares of RM0.01 each in idimension RM and sen - Ringgit Malaysia and sen respectively Record of Depositors - A record of securities holders provided by Bursa Depository under the Rules of Bursa Depository Rules of Bursa Depository - The rules of Bursa Depository as issued pursuant to the Securities Industry (Central Depositories) Act, 1991 of Malaysia as amended from time to time, including the Securities Industry (Central Depositories) Amendment Act, 1998 of Malaysia Sale Shares - 1,000,000 IDB Shares to be acquired by idimension pursuant to the Proposed Acquisition Shares or idimension Shares - Ordinary shares of RM0.10 each in idimension SPA - The conditional share purchase agreement dated 9 March 2015 entered into between idimension and Online E-Club in relation to the Proposed Acquisition USD - United States of America dollars VWAP - Volume-weighted average price Warrants - Warrants to be allotted and issued pursuant to the Proposed Bonus Issue of Warrants Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include company or corporations, unless otherwise specified. All references to you in this Circular are to Shareholders. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Circular shall be a reference to Malaysian time, unless otherwise stated. Certain statements in this Circular may be forward-looking in nature, which are subject to uncertainties and contingencies. Forward-looking statements may contain estimates and assumptions made by the Board after due enquiry, which are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied in such forwardlooking statements. In light of these and other uncertainties, the inclusion of a forward-looking statement in this Circular should not be regarded as a representation or warranty that the plans and objectives of the Company will be achieved. iii

5 DEFINITIONS (CONT D) The word approximately used in this Circular is to indicate that a number is not an exact one, but that number is usually rounded off to the nearest tenth / hundredth or one / two decimal places. Any numeric discrepancies in the tables included in this Circular between the listed amounts and the totals thereof are due to rounding differences. In this Circular:- (i) (ii) references to persons connected with another are references to such persons as defined under Section 122A of the Act; and references to a substantial shareholder and their indirect shareholdings shall have the meaning defined under Section 6A and Section 69D of the Act. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] iv

6 TABLE OF CONTENTS PART A PAGE LETTER TO THE SHAREHOLDERS OF IDIMENSION IN RELATION TO THE PROPOSALS:- 1. INTRODUCTION 1 2. PROPOSED ACQUISITION 2 3. PROPOSED BONUS ISSUE OF WARRANTS 9 4. PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL PROPOSED AMENDMENT RATIONALE FOR THE PROPOSALS RISK FACTORS IN RELATION TO THE PROPOSED ACQUISITION INDUSTRY OVERVIEW, PROSPECTS AND FUTURE PLANS EFFECTS OF THE PROPOSALS HISTORICAL SHARE PRICES APPROVALS REQUIRED ESTIMATED TIMEFRAME INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM RELATED PARTY TRANSACTION CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION BOARD S RECOMMENDATION AUDIT COMMITTEE S STATEMENT TOTAL AMOUNT TRANSACTED WITH THE SAME RELATED PARTY FOR THE PRECEDING TWELVE (12) MONTHS EGM FURTHER INFORMATION 26 PART B IAL TO THE NON-INTERESTED SHAREHOLDERS OF IDIMENSION IN RELATION TO THE PROPOSED ACQUISITION 27 v

7 TABLE OF CONTENTS (CONT D) APPENDICES APPENDIX I FURTHER INFORMATION 71 APPENDIX II INFORMATION ON IDB 74 APPENDIX III AUDITED FINANCIAL STATEMENTS OF IDB FOR THE FYE 31 DECEMBER NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] vi

8 PART A LETTER TO THE SHAREHOLDERS OF IDIMENSION IN RELATION TO THE PROPOSALS

9 IDIMENSION CONSOLIDATED BHD (Company No A) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office Level 7, Menara Milenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights Kuala Lumpur Malaysia 28 May 2015 Board of Directors:- Datu Dr. Michael Dosim AK Lunjew (Independent Non-Executive Chairman) Daniel Boo Hui Siong (Managing Director) Pang Lee Fung (Executive Director) Khoo Han Sen (Executive Director) Tan Kian Meng (Executive Director) Eric Lim Kheng Joo (Independent Non-Executive Director) Collin Goonting A/L O.S. Goonting (Independent Non-Executive Director) To: The shareholders of idimension Dear Sir / Madam, (I) (II) (III) (IV) PROPOSED ACQUISITION; PROPOSED BONUS ISSUE OF WARRANTS; PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL; AND PROPOSED AMENDMENT (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION On 9 March 2015, Mercury Securities had, on behalf of the Board, announced that idimension proposes to undertake the following:- (i) (ii) (iii) (iv) Proposed Acquisition; Proposed Bonus Issue of Warrants; Proposed Increase in Authorised Share Capital; and Proposed Amendment. On even date, Mercury Securities had, on behalf of the Board, announced that idimension had entered into a conditional SPA with Online E-Club for the Proposed Acquisition. 1

10 On 24 March 2015, Mercury Securities had, on behalf of the Board, announced that the Board had resolved that the Proposed Bonus Issue of Warrants is conditional upon the Proposed Acquisition. On 19 May 2015, Mercury Securities had, on behalf of the Company, announced that Bursa Securities had vide its letter dated 19 May 2015 granted its approval for the:- (i) (ii) (iii) admission of the Warrants to the Official List of Bursa Securities and the listing and quotation of 247,462,179 Warrants; listing and quotation of up to 247,462,179 Shares arising from the exercise of the Warrants on the ACE Market of Bursa Securities; and listing and quotation of 50,000,000 Consideration Shares to be issued pursuant to the Proposed Acquisition. The approval of Bursa Securities is subject to the conditions set out in Section 11, Part A of this Circular. In view of the interest of the Major Shareholder for the Proposed Acquisition as disclosed in Section 13, Part A of this Circular, the Proposed Acquisition is deemed a related party transaction pursuant to Rule of the Listing Requirements. Accordingly, Affin Hwang IB has been appointed as the Independent Adviser to advise the non-interested shareholders in relation to the Proposed Acquisition on whether the terms of the Proposed Acquisition are fair and reasonable and whether the transaction is to the detriment of the non-interested shareholders of idimension. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH RELEVANT INFORMATION ON THE PROPOSALS AND TO ACCORDINGLY SEEK YOUR APPROVAL FOR THE RESOLUTIONS PERTAINING TO THE SAME TO BE TABLED AT THE FORTHCOMING EGM OF IDIMENSION. THE NOTICE OF EGM AND THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR. YOU ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF BOTH PART A AND PART B OF THIS CIRCULAR TOGETHER WITH THE APPENDICES BEFORE VOTING ON THE RESOLUTIONS TO GIVE EFFECT TO THE PROPOSALS AT THE FORTHCOMING EGM. 2. PROPOSED ACQUISITION 2.1 Details of the Proposed Acquisition On 9 March 2015, idimension had entered into a conditional SPA with Online E-Club to purchase the Sale Shares representing the remaining 20% equity interest in IDB not already owned by idimension, for a purchase consideration of RM5 million to be fully satisfied via the issuance of 50,000,000 Consideration Shares. In view that idimension Group was in the loss making position for the past three (3) FYEs up to 31 December 2014, the Board is of the opinion that the cash and cash equivalents of the Group should not be utilised to finance the Proposed Acquisition but should be conserved for working capital purposes and for the expansion of the Group s existing business. After due consideration, the Board is of the view that the issuance of Consideration Shares to Online E-Club is the most appropriate method of financing the Proposed Acquisition. Pursuant to the terms of the SPA, the Sale Shares will be acquired free from all encumbrances, liens, charges and other encumbrances whatsoever and with all rights accruing to those Sale Shares. 2

11 Presently, IDB is an 80%-owned subsidiary of idimension with the balance of 20% equity interest being held by Online E-Club. Upon completion of the Proposed Acquisition, IDB will become a wholly-owned subsidiary of idimension. 2.2 Salient terms of the SPA The salient terms of the SPA include, inter alia, the following: Purchase price and terms (i) (ii) Subject to the terms and conditions contained in the SPA, Online E-Club hereby agrees to sell, and idimension hereby agrees to purchase the Sale Shares, free from all pledges or liens or any other encumbrances and with all rights now or hereinafter attaching thereto including but without limitation to all bonuses, rights, dividends and distributions declared paid or made in respect thereof as from the date of the SPA, for a purchase price of RM5,000,000. The Purchase Consideration which is arrived at based on a willing-buyer willing-seller basis, shall be satisfied entirely by way of issuance by idimension of 50,000,000 new idimension Shares free from any encumbrances or moratorium, to be issued and allotted to the Vendor at the price of RM0.10 per Share on the date of completion of the SPA Conditions precedent The completion of the sale and purchase of the Sale Shares is conditional upon the following conditions being satisfied within a period of three (3) months from the date of the SPA or within such further period as may be mutually agreed upon by the parties thereto in writing, namely:- (i) (ii) (iii) the approval of the shareholders of idimension (obtained in an EGM to be convened) for the issuance and allotment of the Consideration Shares to Online E-Club in accordance with the terms of the SPA; the approval of Bursa Securities for the listing and quotation of the Consideration Shares; and the approval or waiver of any regulatory requirement by any other relevant authorities, if required, (collectively "Approvals"). (a) (b) If the Approvals are not obtained upon the expiry of the period stipulated above or such extension period as may be mutually agreed upon by the parties thereto in writing as the case may be; or If the steps to modify the terms and conditions imposed in connection with the granting of the Approvals in accordance with the provisions of the SPA are not successful upon the expiration of two (2) months from receiving notice from a party objecting to any conditions or terms so imposed ( Objecting Party ); then, in the case of (a) any party thereto may, or in the case of (b) above, the Objecting Party may, thereupon by giving notice in writing of its intention to terminate the SPA to the other party thereto, summarily terminate the SPA whereupon the SPA shall be at an end and of no further effect and neither party thereto shall have any further claim against the other pursuant to the terms of the SPA or arising therefrom save for any antecedent breaches. 3

12 The conditions precedent are stipulated for the benefit of idimension and therefore idimension shall be entitled at its sole discretion and to the extent permissible by law, to waive any of the said conditions not satisfied. The SPA shall become unconditional on the date on which the last of the conditions precedent are satisfied in accordance with the terms of the SPA ( Unconditional Date ) Completion Unless otherwise agreed by the parties thereto in writing, completion of the SPA shall take place on a business day not later than thirty (30) days after the Unconditional Date, or on such later date as the parties thereto shall mutually agree in writing Default and termination (i) On the occurrence of any of the events set out below with respect to a party ( Defaulting Party ), the other party ( Non-Defaulting Party ) may give notice in writing to the Defaulting Party specifying the relevant event or events and requiring the Defaulting Party to remedy the same (if capable of remedy) within fourteen (14) days of the receipt of such notice. The events are:- (a) Breach In the opinion of the Non-Defaulting Party, the Defaulting Party has committed a material breach of any term or condition of the SPA or if he / it fails to perform or observe any material undertaking, obligation or agreement expressed or implied in the SPA; (b) Receiver / Special Administrator A receiver, receiver and manager, trustee or similar official is appointed over any of the assets or undertaking of the Defaulting Party or of IDB; (c) Insolvency / Bankruptcy The Defaulting Party, where the Defaulting Party is a company, or IDB, is or becomes unable to pay its debts when they are due or becomes unable to pay its debts within the meaning of the Act or in the case where the Defaulting Party is an individual, the Defaulting Party is declared a bankrupt within the meaning of the Bankruptcy Act 1967; (d) Arrangements The Defaulting Party or IDB enters into or resolves to enter into any arrangement, composition or compromise with, or assignment for the benefit of, its creditors or any class of them; (e) Winding Up An application or order is made for the winding up or dissolution of the Defaulting Party or IDB or a resolution is passed or any steps are taken to pass a resolution for the winding up or dissolution of the Defaulting Party or IDB otherwise than for the purpose of an amalgamation or reconstruction which has the prior written consent of the Non-Defaulting Party; and 4

13 (f) Cessation of Business The Defaulting Party or IDB ceases or threatens to cease carrying on all or a substantial portion of its business. (ii) (iii) (iv) Online E-Club and idimension shall within seven (7) days after notice has been given under Section 2.2.4(i), meet to discuss the event or events giving rise to the notice with a view to the Defaulting Party or IDB (where appropriate) remedying the event. In the event that the breach is not remedied within fourteen (14) days of the Non-Defaulting Party having given notice under the SPA, the SPA shall be terminated forthwith without any requirement or need for the Non-Defaulting Party to give any further notice or reasons therefor. Upon the termination of the SPA in accordance with the provisions thereof, the SPA shall be null and void and none of the parties thereto shall have any claim against each other save for any antecedent breach. In the alternative, any party thereto shall be entitled to the rights of specific performance against the other under the provisions of the SPA and in the event of any party thereto exercising its right to specific performance of the SPA, an alternative remedy of monetary compensation shall not be regarded as sufficient compensation for the other party's default in the performance of the terms and conditions of the SPA. 2.3 Basis of determining the issue price of the Consideration Shares and Purchase Consideration Issue price of the Consideration Shares The issue price for the Consideration Shares of RM0.10 per Share was derived at on a negotiated basis between idimension and the Vendor after taking cognisance of inter alia, the following:- (i) the three (3)-month VWAP of RM up to and including LTD (1) ; (ii) (iii) the six (6)-month VWAP of RM up to and including LTD (2) ; and the par value of RM0.10 per idimension Share. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 5

14 Notes:- (1) The table below sets out the average monthly closing market price of idimension for the past twelve (12) months up to February 2015, being the month prior to the Company entering into the SPA:- Month Average monthly closing market price (RM) 2014 March April May June July August September October November December January February (Source: Bloomberg) The Company had commenced discussion on the Proposed Acquisition with the Vendor in early December 2014 and the SPA was entered into after three (3) months in early March Hence, the Board has resolved to use the three (3)-month VWAP commencing December 2014 and up to and including LTD in determining the issue price of the Consideration Shares. Based on the table above, the historical closing market prices of idimension Shares had been generally trading on a downward trend for the past one (1) year. It is noted from the table that the average monthly closing market prices of idimension Shares from December 2014 to February 2015 had been below par value of RM0.10 per idimension Share. The Board had also considered the low trading volumes of idimension Shares in the three (3) full months (December 2014 to February 2015) prior to the month the SPA was entered into. During that three (3)-month period, idimension Shares had an average daily trading volume of approximately 1,043,948 Shares, representing approximately 0.23% of the total issued and paid-up share capital of idimension as at 27 February (2) idimension Shares have been trading between RM0.075 and RM0.140 for the past six (6) months up to and including February 2015 and the issue price of RM0.10 per Consideration Share falls within this range Purchase Consideration The Purchase Consideration was arrived at on a willing-buyer willing-seller basis, after taking into consideration inter alia, the following:- (i) the audited PAT of IDB for the 17-month period ended 31 December 2013 of RM2.05 million and the audited PAT of IDB for the FYE 31 December 2014 of RM2.55 million; (ii) IDB is currently contributing positively to the Group s earnings. The online games segment has contributed approximately 53% of the total revenue of idimension Group based on the Company s latest audited financial statements for FYE 31 December 2014; 6

15 (iii) the Purchase Consideration of RM5 million for a 20% equity interest in IDB implies a value accorded to IDB based on 100% equity interest of RM25 million, which is similar on the purchase consideration of IDB in respect of the first 20% equity interest (RM5 million) and the subsequent acquisition of 60% equity interest (RM15 million) by idimension, which were completed in June 2013 and May 2014 respectively. In relation to the above, the Board wishes to inform that notwithstanding that IDB did not meet its financial projections mentioned in Section 3.4(ii) as well as Appendix V of the Company s circular to shareholders dated 7 April 2014 in relation to the Previous Acquisition, the Company is still paying the same purchase consideration amount for this Proposed Acquisition. For information purposes, the projected PAT of IDB for the Previous Acquisition from the period commencing 1 January 2014 to 31 December 2014 is RM6.14 million whereas the actual audited PAT of IDB for the FYE 31 December 2014 is RM2.55 million. IDB is still in its initial stage of business development and the company has decided to postpone its plans to set up local offices in Indonesia and the Philippines but instead focus on expanding its distribution network via the appointment of resellers in these two (2) countries, as set out in Section 2, Appendix II of this Circular. Despite that, IDB has already started generating revenue in FPE 31 December 2013 since its commencement of business. IDB has recorded increasing revenues since then, with an increase of 76% in PAT for FYE 31 December 2014 as compared to the annualised PAT for the twelve (12)- month period ending 31 December 2013 of RM1.45 million (1). Please refer to Section 7, Appendix II of this Circular for the historical financial information of IDB. Based on the above and the future earnings potential as well as prospects of IDB, the Board expects that the profitability of the company will increase in the medium term, which will contribute positively towards the Group. Hence, the Purchase Consideration is deemed reasonable. Note:- (1) Calculated based on the audited PAT of IDB for the 17-month period ended 31 December 2013 of RM2.05 million. (iv) the rationale of the Proposed Acquisition as set out in Section 6.1, Part A of this Circular; (v) the outlook of the ICT and online games industries as stated in Section 8.2, Part A of this Circular; and (vi) the prospects and future plans of IDB as stated in Section 8.3, Part A of this Circular. 2.4 Ranking and listing of the Consideration Shares The Consideration Shares shall, upon allotment and issue, rank pari passu in all respects with the existing issued idimension Shares, save and except that they shall not be entitled to participate in any dividends, rights, allotments and/or any other distributions, the entitlement date of which is prior to the date of allotment of the Consideration Shares. The Consideration Shares will be listed on the ACE Market of Bursa Securities subject to idimension obtaining the necessary approvals. 7

16 2.5 Liabilities to be assumed by idimension Save for the liabilities as disclosed in the financial statements of IDB in Appendix III of this Circular, the Group will not be assuming any other liabilities including contingent liabilities and guarantees pursuant to the Proposed Acquisition. 2.6 Additional financial commitment required There will not be any financial commitment required from idimension in putting the business of IDB on-stream in view that IDB is already an income generating entity and has sufficient working capital for its business as a going concern. 2.7 Information on IDB IDB was incorporated in Malaysia on 23 May 2011 under the Act as a private limited company with the name of Selingsing Xpress Sdn. Bhd. It assumed its present name on 2 August As at LPD, IDB has an authorised share capital of RM5,000,000 comprising 5,000,000 IDB Shares, all of which have been issued and fully paid up. As at LPD, idimension owns 4,000,000 IDB Shares representing 80% equity interest in IDB while the remaining 20% equity interest is held by Online E-Club. Detailed information on IDB is set out in Appendix II of this Circular. 2.8 Information on Online E-Club Online E-Club was incorporated in Malaysia under the Act on 2 November It is a registered member of the Communications and Multimedia Content Forum of Malaysia under the category of content creators / distributors. Online E-Club is principally involved in the design, application and promotion of the use of various computer software. Since 2004, Online E-Club has been authorised to administer, resell and regulate Valve Corporation software in Malaysia, Singapore, Brunei, Vietnam, the Philippines, Cambodia, Indonesia and Thailand. Online E-Club s business model is based on the licence subscription model for cybercafé that includes but not limited to services and activities related to anti-piracy, café management system and marketing and promotions in the respective countries. As at LPD, the authorised share capital of Online E-Club is RM5,000,000 comprising 5,000,000 ordinary shares of RM1.00 each, of which RM1,550,000 comprising 1,550,000 ordinary shares of RM1.00 each have been issued and fully paid-up. The Directors and substantial shareholders of Online E-Club, all of whom are Malaysians and their shareholdings in Online E-Club as at LPD are as follows:- Direct Interest Indirect interest Directors / Substantial shareholders No. of Online E-Club shares % No. of Online E-Club shares % Ang Beng Leong 1,549, Datuk Abdul Hamid bin Mustapha 1 (1) Note:- (1) Negligible. 8

17 2.9 Original cost of investment Online E-Club s original cost of investment in IDB for the 1,000,000 Sale Shares representing the 20% equity stake in IDB is as follows:- Date of investment No. of IDB Shares Original cost of investment Vendor acquired (RM) Online E-Club 15 July ,000,000 1,000, PROPOSED BONUS ISSUE OF WARRANTS 3.1 Basis and number of Warrants to be issued The Proposed Bonus Issue of Warrants is to be implemented on the basis of one (1) Warrant for every two (2) existing Shares held by Entitled Shareholders on the Entitlement Date. For implementation purposes, the Proposed Acquisition will be implemented before the Proposed Bonus Issue of Warrants. Hence, the Consideration Shares arising from the Proposed Acquisition shall be entitled to the Warrants. Based on the Company s issued and paid-up share capital of RM44,492, as at LPD comprising 444,924,359 Shares and after the issuance of 50,000,000 Consideration Shares prior to the Entitlement Date, the Proposed Bonus Issue of Warrants would entail the issuance of 247,462,179 Warrants. Fractional entitlements for the Warrants, if any, will be disregarded and/or shall be dealt with by the Board in such manner as the Board in its absolute discretion deems fit and expedient or in the best interest of the Company. The Entitlement Date will be determined and announced at a later date upon the receipt of all relevant approvals for the Proposed Bonus Issue of Warrants. The Proposed Bonus Issue of Warrants is not intended to be implemented in stages. 3.2 Indicative salient terms of the Warrants Issuer : idimension Issue size : 247,462,179 Warrants. Form and denomination Exercise Rights : The Warrants will be issued in registered form and constituted by the Deed Poll. : Each Warrant shall entitle the registered holder ( Warrant Holder ) to subscribe for one (1) new Share at any time during the Exercise Period at the Exercise Price, subject to adjustments in accordance with provisions of the Deed Poll. Board lot : For purpose of trading on Bursa Securities, a board lot of Warrants shall be 100 units of Warrants, unless otherwise revised by the relevant authorities. Tenure of Warrants : Five (5) years from the date of issuance of the Warrants. Exercise Price : RM0.10 per Warrant or such price as adjusted under the provision of the Deed Poll. 9

18 Exercise Period : The Warrants may be exercised at any time during the tenure of the Warrants of five (5) years including and commencing from the issue date and ending at 5.00 p.m. on the Expiry Date. Any Warrants which have not then been exercised will lapse and every Warrant not exercised by then will cease to be valid for any purpose. Expiry Date : A date which falls on the day before the fifth (5 th ) anniversary of the issue date of the Warrants, provided that if such day falls on a day which is not a market day, then it shall be the market day immediately preceding the said non-market day. Adjustments to the Exercise Price and/or the number of the Warrants Ranking of the new Shares to be issued pursuant to the exercise of the Warrants Modification of rights of Warrant holder : Subject to the provisions of the Deed Poll, the Exercise Price and/or the number of Warrants held by each Warrant Holder shall be adjusted by the Board in consultation with an approved adviser appointed by the Company and certification by the auditors of the Company in the event of any alteration to the share capital of the Company at any time during the tenure of the Warrants. Any adjustment to the Exercise Price will be rounded up to the nearest one (1) sen and in no event shall any adjustment (otherwise than upon the consolidation of ordinary shares into shares of a larger par value) involve an increase in the Exercise Price or result in the Exercise Price falling below the par value of the ordinary shares for the time being. : The new Shares to be issued pursuant to the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the then existing issued and fully paid-up Shares of the Company, save and except that they shall not be entitled to any rights, allotments, dividends and/or other distributions, the entitlement date of which precedes the date of allotment of the said new Shares issued pursuant to the exercise of the Warrants. : The Company may, from time to time, without the consent or sanction of the Warrant Holders but in accordance with the Deed Poll, modify the Deed Poll, where such modifications amendments or additions are required to correct any manifest or typographical errors or relating to purely administrative matters or to comply with the mandatory provisions of the laws of Malaysia (including and in particular, the Central Depositories Act), the rules of Bursa Malaysia Depository Sdn Bhd and the Listing Requirements or if, in the opinion of the Adviser, it will not be materially prejudicial to the interests of the Warrant Holders. Bursa Securities must be promptly notified of such modifications. Save as expressly provided above, no modification, amendment, deletion or addition may be made to the provisions of the Deed Poll without the sanction of a special resolution. Any modification, amendment, deletion or addition to the Deed Poll (including, the form and content of the Warrants Certificate) may be effected only by a deed executed by the Company and expressed to be supplemental to the Deed Poll, and a memorandum of every such supplemental deed shall be endorsed on the Deed Poll. Notice of every modification, amendment, deletion or addition to the Deed Poll (including, the form and content of the Warrants Certificate) shall be given to the Warrant Holders in accordance with the Deed Poll. 10

19 Rights of Warrant Holders Rights of the Warrant holders in the event of winding-up, liquidation, compromise and/or arrangement : The Warrant Holders are not entitled to any voting rights in any general meeting of the Company or to participate in any distribution and/or offer of further securities in the Company until and unless such Warrant Holders are issued with new Shares arising from their exercise of the Warrants. : Where a resolution has been passed by the Company for a members voluntary winding-up or there is a compromise or arrangement, whether or not for the purpose of or in connection with a scheme for the reconstruction of the Company or the amalgamation of the Company with one (1) or more companies then:- (a) for the purposes of such winding-up, compromise or arrangement (other than a consolidation, amalgamation or merger in which the Company is the continuing corporation) to which the holders of the Warrants (or some person designated by them for such purpose by special resolution of the holders of Warrants) shall be a party, the terms of such winding-up, compromise and arrangement shall be binding on all the holders of the Warrants; (b) in any other case every Warrant Holder shall be entitled at any time within six (6) weeks after the passing of such resolution for a members voluntary winding up of the Company or six (6) weeks after the granting of the court order approving the compromise or arrangement, by the irrevocable surrender of his Warrants to the Company together with payment of the relevant Exercise Price, to elect to be treated as if he had immediately prior to the commencement of such winding up, compromise or arrangement exercised the Exercise Rights represented by his Warrants to the extent specified in the exercise forms and be entitled to receive out of the assets of the Company which would be available in liquidation if he had on such date been the holder of the new shares to which he would have become entitled pursuant to such exercise and the liquidator of the Company shall give effect to such election accordingly. Subject to the above, if the Company is wound up, all Exercise Rights which have not been exercised within six (6) weeks of the passing of such resolution shall lapse and the Warrants will cease to be valid for any purpose. Listing : Approval will be sought from Bursa Securities for the admission of the Warrants to the Official List as well as the listing and quotation of the Warrants and new Shares arising from the exercise of the Warrants on the ACE Market of Bursa Securities. Transferability : The Warrants shall be transferable in the manner provided under the Securities Industry (Central Depositories) Act, 1991 of Malaysia and the Rules of Bursa Depository. Governing Law : The Warrants and the Deed Poll shall be governed by the laws of Malaysia. 11

20 3.3 Basis and justification of the issue price and exercise price of the Warrants The Warrants will be issued at no cost to Entitled Shareholders. The Board has fixed the exercise price of the Warrants at RM0.10 per Warrant, which represents a discount of approximately 11.11% to the five (5)-day VWAP of idimension Shares up to and including 6 March 2015 of RM0.1125, being the day immediately preceding the date of fixing the exercise price of the Warrants. The Board in determining the exercise price has taken into consideration, inter alia, the following:- (i) (ii) (iii) (iv) (v) the par value of the Shares of RM0.10 each; the prevailing market conditions and market price of the Shares; the Warrants being exercisable at any time within a five (5)-year period from the date of issue of the Warrants; the Group s prospects as well as the trading volume and liquidity of the Shares; and the potential future earnings of the Group. 3.4 Ranking of the Warrants and the new Shares to be issued arising from the exercise of the Warrants The Warrant Holders are not recognised as shareholders and are not entitled to any dividends, rights, allotments and/or other distributions until and unless such holders of the Warrants convert their Warrants into new Shares. The new Shares to be issued arising from the exercise of the Warrants shall, upon allotment and issuance, rank pari passu in all respects with the then existing issued and paid-up ordinary shares of the Company, except that they shall not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid prior to the date of allotment of the new Shares. 3.5 Utilisation of proceeds The Proposed Bonus Issue of Warrants will not raise any immediate funds as the Warrants will be issued at no cost to Entitled Shareholders. The exact quantum of proceeds that may be received by the Company upon the exercise of the Warrants would depend on the actual number of Warrants exercised during the tenure of the Warrants. Strictly for illustrative purposes, assuming the full exercise of 247,462,179 Warrants at an exercise price of RM0.10, the proceeds to be raised is approximately RM24.7 million. Such proceeds will be used to supplement the Group s existing working capital to finance the Company s day-to-day operations, including the purchase of raw materials, defrayment of operational and administrative expenses such as purchases of maintenance services and renewal of software licences, marketing expenses for new and existing products, staff salaries and etc. The proceeds to be utilised for each component of working capital are subject to the operating requirements at the time of utilisation and therefore cannot be determined at this juncture. [THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 12

21 4. PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL As at LPD, the authorised share capital of idimension is RM50,000,000 comprising 498,000,000 Shares and 20,000,000 RCPS, of which RM44,492, comprising 444,924,359 Shares have been issued and fully paid-up. The Company proposes to increase its authorised share capital to RM100,000,000 comprising 998,000,000 Shares and 20,000,000 RCPS. 5. PROPOSED AMENDMENT The Proposed Amendment entails the consequential amendment to the Memorandum and Articles of Association of idimension to facilitate the implementation of the Proposed Increase in Authorised Share Capital. Clause vi of the Memorandum of Association of the Company is proposed to be amended in the following manner:- Clause No. vi Existing Clause The capital of the Company is RM50,000, divided into 498,000,000 ordinary shares of RM0.10 each and 20,000,000 redeemable convertible preference shares of RM0.01 each. The Company shall have the power to increase or reduce its capital, to consolidate or sub-divide the shares into shares of larger or smaller amounts, and to divide the shares in the original, increased or reduced capital into several classes and there may be attached thereto respectively preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise and to issue all or any part of the original or any additional capital as fully paid or partly paid shares, and with any special or preferential rights or privileges, or subject to any special terms or conditions and either with or without any special designation, and also from time to time to alter, modify, commute, abrogate or deal with any such rights, privileges, terms, conditions, or designations in accordance with the regulations for the time being of the Company. Proposed Amendment The capital of the Company is RM100,000, divided into 998,000,000 ordinary shares of RM0.10 each and 20,000,000 redeemable convertible preference shares of RM0.01 each. The Company shall have the power to increase or reduce its capital, to consolidate or sub-divide the shares into shares of larger or smaller amounts, and to divide the shares in the original, increased or reduced capital into several classes and there may be attached thereto respectively preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise and to issue all or any part of the original or any additional capital as fully paid or partly paid shares, and with any special or preferential rights or privileges, or subject to any special terms or conditions and either with or without any special designation, and also from time to time to alter, modify, commute, abrogate or deal with any such rights, privileges, terms, conditions, or designations in accordance with the regulations for the time being of the Company. 6. RATIONALE FOR THE PROPOSALS 6.1 Proposed Acquisition The Company has been actively seeking new, strategic business opportunities to expand and diversify its software solutions and other complementary ICT-related services businesses. The Group had diversified its business to include the provision and distribution of broadband contents and online games through the acquisition of a further 60% of IDB in May This was undertaken with a view to improve the financial condition of the Group and has allowed the Group to avoid being over-reliant to its existing core business of development and provision of computer software as the only source of revenue. 13

22 The Proposed Acquisition will provide an opportunity for idimension to increase its equity interest in a growing and profitable company in the online games segment as well as to fully consolidate its interest in IDB. For the FYE 31 December 2014, IDB had recorded an audited PAT of approximately RM2.55 million, which is an increase of 24.39% compared to its audited PAT of approximately RM2.05 million for the 17-month period ended 31 December Upon completion of the Proposed Acquisition, IDB will become a wholly-owned subsidiary of idimension. This is expected to further enhance the Group s financial performance in terms of revenue and profitability by fully realising the revenue generated from the new gaming online segments contributed from IDB, thus enhancing shareholders value. The improving outlook of the online games industry in South East Asia as outlined in Section 8, Part A of this Circular is one (1) of the key factors to the Proposed Acquisition. IDB is expected to generate more revenue by further enhancing its presence in the market regions that it is currently active in, namely Indonesia and the Philippines. This will benefit idimension from the increased regional exposure in the countries that IDB is venturing into and accordingly boost demand for its range of ICT services through cross selling of its customised solutions to IDB s growing distribution network. Furthermore, the Proposed Acquisition is expected to further enhance the ability of IDB in securing funding for its business expansions as outlined in Section 8.3, Part A of this Circular. With IDB being fully consolidated into idimension upon completion of the Proposed Acquisition, IDB would be able to fully leverage on idimension s listing status on the ACE Market of Bursa Securities to raise funding from the capital markets for its future expansion plans. Having considered the above factors, the Board is of the view that the Proposed Acquisition is adequate in improving its financial performance for the near term. Nonetheless, the Board will continue to seek new, strategic business opportunities to further strengthen the financial performance of the Group. 6.2 Proposed Bonus Issue of Warrants The rationale of the Proposed Bonus Issue of Warrants is as follows:- (i) (ii) (iii) (iv) to reward Entitled Shareholders for their continuous support by enabling them to participate in convertible securities of the Company which are tradable on the ACE Market of Bursa Securities, without incurring any cost; to provide Entitled Shareholders with an opportunity to increase their equity participation in the Company at a predetermined exercise price during the tenure of the Warrants, and to allow them to further participate in the future growth of the Company when the Warrants are exercised; to provide the Company with additional working capital when the Warrants are exercised in the future. The exercise of the Warrants will allow the Company to obtain proceeds without incurring interest expenses as compared to bank borrowings; and to strengthen the capital base of the Company pursuant to the exercise of the Warrants and provide the Company with greater flexibility in terms of funding options to meet its future funding requirements. 6.3 Proposed Increase in Authorised Share Capital The Proposed Increase in Authorised Share Capital is undertaken to facilitate the issuance of Shares arising from the exercise of Warrants and to cater for any increase in the share capital of the Company arising from any future corporate exercises involving the issuance of equity and equity-related securities including, amongst others, ordinary shares and convertibles. 14