Opinions of the Independent Financial Advisor regarding the acquisition of assets

Transcription

1 (Translation) This English translation has been prepared solely for the convenience of foreign shareholders of VGI Global Media Public Company Limited. The Thai language version is the definitive and official document to this report and shall prevail in all respects in the event of any inconsistency with this English translation. Opinions of the Independent Financial Advisor regarding the acquisition of assets To be supporting document for Extraordinary General Meeting of Shareholders VGI Global Media Public Company Limited September 19, 2014 Prepared by Finnex Advisory Company Limited

2 Table of Contents Page Executive Summary 4 Part 1 : Characteristics and Details of Transaction Date of Transaction Related Parties and Relationship with the Company General Characteristics and Size of Transaction Details of Assets Acquired Shareholding Structure after Transaction Total Value of Consideration and Basis to Determine Value of Consideration Terms and Conditions of Payment Sources of Funds Transaction Conditions Main Points of Draft Preliminary Memorandum of Understanding Main Points of Management Contract Obligations and Legal Disputes of Tong Hua Related Transactions between the Company and Tong Hua 14 Part 2 : Reasonableness of Transaction Objectives and Necessity of Transaction Comparison of Advantages and Impacts of Entering into Transactions Comparison of Advantages and Impact of Not Entering into Transactions Risks of Entering into Transactions 18 Part 3 : Fairness of Price and Transaction Conditions Appropriateness of Price on Asset Acquisition 22 1) Book Value Approach 23 2) Adjusted Book Value Approach 23 3) Market Value Approach 42 4) Market Comparable Approach 43 5) Discounted Cash Flow Approach Appropriateness of Transaction Conditions 49 Part 4 : Opinion of Independent Financial Advisor on Assets Acquisition 51 Part 5 : Attachment of General Information VGI Global Media Public Co., Ltd Tong Hua Communications Public Co., Ltd. and Tong Hua Daily Newspaper Co., Ltd Aqua Ad Public Co., Ltd. 84 Finnex Advisory Company Limited -i -

3 Acronym and Definition Office of SEC, SEC : Office of Securities and Exchange Commission Stock Exchange, SET : The Stock Exchange of Thailand The Company, VGI : VGI Global Media Public Co., Ltd. Tong Hua, TH : Tong Hua Communications Public Co., Ltd. Tong Hua Daily News, THD : Tong Hua Daily Newspaper Co., Ltd. AQUA : Aqua Corporation Public Co., Ltd. Aqua Ad, AA : Aqua Ad Public Co., Ltd. Independent Financial : Finnex Advisory Co., Ltd. Advisor, FINNEX MM : Million Miles Co., Ltd. RSP : R.S.P. Steel Co., Ltd. Spring News TV : Spring News Television Co., Ltd. Transaction : Purchasing newly-issued ordinary shares of Tong Hua Communications Public Co., Ltd. by VGI Global Media Public Co., Ltd. Private Placement, PP : Sale of new shares to a relatively small number of select investors Right Offering, RO : Sales of new shares to existing shareholders Finnex Advisory Company Limited -ii -

4 September 19, 2014 Re: To: Ref. : Opinion of Independent Financial Advisor on Asset Acquisition of VGI Global Media Public Company Limited Shareholders of VGI Global Media Public Company Limited 1) Resolution of the Board of Directors Meeting of VGI Global Media Public Co., Ltd. No. 6/2014 on August 8, ) Information Memorandum on Asset Acquisition of VGI Global Media Public Co., Ltd. on August 8, ) Annual Information Disclosure Form (56-1 Form) of VGI Global Media Public Co., Ltd., ended March 31, ) Draft Preliminary Memorandum of Understanding between VGI Global Media Public Company Limited and Tong Hua Communications Public Company Limited 5) Notice Confirming Shareholding in Tong Hua Communications Public Company Limited of VGI Global Media Public Company Limited and the related parties, pursuant to Section 258 as of August 20, ) Information Memorandum on Connected Transaction Sales of Common Shares of Tong Hua Daily News Company Limited 7) Information Memorandum of Asset Acquisition Purchase of Common Shares of Aqua Ad Public Co., Ltd. 8) Information Memorandum on Connected Transaction Execution of Service Agreement on Sales and Marketing Management with VGI Global Media Public Company Limited 9) Information Memorandum on Offering of Newly Issued Shares on Private Placement Basis at Low Prices of Tong Hua Communications Public Company Limited Disclaimers: 1) Study results of Finnex Advisory Company Limited ( Independent Financial Advisor or FINNEX ) in this report are based on information and assumptions obtained from management of Tong Hua Communications Public Company Limited, Tong Hua Daily News Company Limited, Aqua Corporation Public Company Limited and Aqua Ad Public Company Limited including information available to the public and in website of the Office of Securities and Exchange Commission ( website of the Stock Exchange of Thailand ( and website of Bank of Thailand ( Finnex Advisory Company Limited Page 1 / 97

5 2) Independent Financial Advisor shall not be liable for any profit or loss including any impacts incurred from entering into this transaction. 3) Independent Financial Advisor conducted this study thoroughly and prudently under code of professional practices. 4) Independent Financial Advisor rendered opinion based on circumstances and information prevailing at the time of this study. Therefore, if there is material change in the said circumstance and information, it may affect opinion provided herein. The Board of Directors Meeting of VGI Global Media Public Company Limited ( the Company ) No. 6/2014 held on August 8, 2014 approved the Company to purchase 640,000,000 newly-issued ordinary shares of Tong Hua Communications Public Company Limited ( TH ) issued and offered on private placement basis at offering price of Baht per share. Therefore total amount that the Company must pay to TH shall be 915,840,000 Baht. TH shall issue and offer 1,565,000,000 new ordinary shares on private placement basis and shall issue and allot 100,000,000 shares to the existing shareholders pursuant to their shareholding proportion (right offering) at the same price offered as per private placement basis. If issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH. In addition, the Company shall enter into share subscription agreement with TH pursuant to format, terms and conditions mutually agreed by both parties. Source of fund shall be acquired from cash flow from operating activities and/or loan from financial institution. This purchase of common shares of TH shall make shareholding proportion of the Company in TH in excess of 25% of paid-up capital after capital increase, which shall be categorized under criteria on acquisition of common shares of business which is required to prepare tender offer for purchase of all securities of the business as per Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover dated May 13, 2011 and the related amendments. However, the Company does not wish to purchase all securities of TH, therefore, the Company and TH shall apply for waiver of tender offer through resolution of shareholders (whitewash) pursuant to criteria specified in the related notification of the Office of Securities and Exchange Commission No. Sor Jor. 36/2546 as it is specified that it is a condition precedent before execution of share subscription agreement. Moreover, entry into the said transaction is categorized as transaction of asset acquisition in accordance with the Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and the Notification of the Board of Directors of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E (collectively referred to as Notifications on Asset Acquisition ). When calculation based on criteria stipulated in those notifications by applying the highest value, size of transaction is equaled to 28.88% (calculation is based on the consolidated financial statement of the Company for the three month ended on June 30, 2014 which has already been reviewed by the auditor). Additionally when combining transactions occurred during 6 month period before entering into this transaction, total size of transaction is 53.73% of total assets, which is higher than 50% Finnex Advisory Company Limited Page 2 / 97

6 but lower than 100%, so it was regarded as Category 1 pursuant to the Notification of the Stock Exchange of Thailand Re: Acquisition or Disposal of Assets and the Company is required to prepare information memorandum to submit to the Stock Exchange of Thailand as well as convene the shareholders meeting to consider and approve the entry into such transaction. The Company s Board of Directors Meeting No. 6/2014 on August 8, 2014 resolved to approve on such transaction and to propose to the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 19, 2014 to consider and approve the acquisition of 640,000,000 ordinary shares of Tong Hua Communications Public Company Limited. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders. The Company has appointed Finnex Advisory Company Limited as the Independent Financial Advisor to provide opinions to the shareholders in relation to reasonableness and fairness of price and conditions on transaction of this assets acquisition. Opinion of the Independent Financial Advisor on this asset acquisition can be summarized as follows: Finnex Advisory Company Limited Page 3 / 97

7 Executive Summary The Company s Board of Directors Meeting of VGI Global Media Public Co., Ltd. (the Company ) No. 6/2014 held on August 8, 2014 approved the Company to purchase 640,000,000 newly-issued ordinary shares of Tong Hua Communications Public Company Limited ( TH ) to be issued and offered on private placement basis at offering price Baht per share. Therefore total amount that the Company must pay to TH shall be 915,840,000 Baht. TH shall issue and offer 1,565,000,000 newly-issued ordinary shares on private placement basis and shall issue and allot 100,000,000 new ordinary shares to the existing shareholders pursuant to their shareholding proportion (right offering) at the same price offered as per private placement basis. If the issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH. In addition, the Company shall enter into share subscription agreement with TH pursuant to format, terms and conditions mutually agreed by both parties. Source of fund shall be acquired from cash flow from operating activities and/or loan from financial institution. When combining such transaction with asset acquisition transactions incurred during the 6 month period before entering into this transaction, total size of transaction shall be equaled to 53.73% which is regarded as Category 1 Transaction as it is equal to or higher than 50% but lower than 100% pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and Notification of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E (collectively referred to as Notifications on Asset Acquisition ). The Company therefore is obligated to disclose information relevant to Category 1 Transaction to the Stock Exchange of Thailand ( SET ) and to convene a shareholders meeting to request for approval on entry of such transaction. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders. Finnex Advisory Company Limited as the Independent Financial Advisor of the Company s shareholders has considered relevant information and document of the Company, TH, THD and AA, conditions on purchasing of newly-issued ordinary shares between the Company and TH, nature and details of transaction, reasonableness on entering into transaction, appropriateness on transaction conditions as well as appropriateness of price of TH s newly-issued ordinary share which is at Baht per share. The Independent Financial Advisor is of opinion that the Company s purchasing of 640,000,000 new ordinary shares of TH at offered price of Baht per share or total amount to be paid by the Company is Bht. 915,840, is appropriated, both on reasonableness and benefits to be gained by the Company. The reasons are that the Company s strategy is to expand its investment to new business, both domestically and abroad, by taking into consideration potential investment project as well as selection of strong strategic partners including focusing on diversified investments fields that the Company excelled. Those factors shall contribute to sustainable growth in longterm of the Company by mainly taking into account the best interest of the Company and the shareholders as a whole. The Company sees opportunity and growth in Out of Home Media and Billboard business expansion to respond to the Finnex Advisory Company Limited Page 4 / 97

8 marketing s and customers groups requirements in larger extent. Investments in TH shall lead to coverage of various types of advertisement media networks and an increased number of billboard s structure, thus it can lead to higher market share. It shall be beneficial from synergy on sales that the Company has experienced and skills, so the Company s shareholders can enjoy increased rate of return in the long run. Purchase price of newly-issued ordinary shares of TH at Bht. per share is reasonable as it is between appropriated ranges assessed by the Independent Financial Advisor which is between Baht/share. Terms of payment and transaction conditions are also appropriated. Finnex Advisory Company Limited as the Independent Financial Advisor recommended that the Company s shareholders should approve this acquisition transaction of newly-issued ordinary shares of TH. However, the final decision rests with the shareholders own discretion and they are advised to study information contained and attached to an invitation to Extraordinary General Meeting of Shareholders No. 1/2014 so that they shall be well informed before deciding to casting vote. Finnex Advisory Company Limited Page 5 / 97

9 Part 1: Characteristics and Details of Transaction 1.1 Date of Transaction After the Company has been approved to enter into this transaction from the Extraordinary General Meeting of Shareholders No. 1/2014 which shall be held on September 19, 2014, transaction date to be specified by the Company and TH shall be on September 30, 2014 or other date mutually agreed by both parties including after fulfillment of all conditions precedent. 1.2 Related Parties and Relationship of the Company Buyer : VGI Global Media Public Company Limited ( the Company ) Seller : Tong Hua Communications Public Company Limited ( TH ) Relationship : The buyer and the seller are not the connected parties. 1.3 General Characteristics and Size of Transaction The Company wishes to expand its business into billboard business in order to better respond to requirements of the markets and customer groups. The Company is now preparing draft preliminary memorandum of understanding pursuant to format, terms and conditions and responsibilities mutually agreed with TH on purchasing of 640,000,000 newly-issued ordinary shares of TH at offered price of Baht per share, so total amount to be paid to TH is 915,840,000 Baht. TH shall issue and offer 1,565,000,000 newly-issued ordinary shares on private placement basis, and offer and allot 100,000,000 newly-issued shares to the shareholders according to their shareholding proportion at the same price offered on private placement basis. If the issued and offered shares both on private placement and right offering basis have been fully subscribed, the Company shall hold 27.06% of paid-up capital of TH after completion of capital increase of TH. Moreover, the entry into of the said transaction is categorized as transaction of asset acquisition in accordance with the Notification of the Capital Market Supervisory Board No. Thor Jor. 20/2551 Re: Rules for Significant Transactions Constituting an Acquisition or Disposal of Assets and the Notification of the Board of Directors of the Stock Exchange of Thailand Re: Disclosure of Information and Practice of Listed Companies Concerning the Acquisition and Disposition of Assets B.E of which transaction size is higher than 50% but lower than 100%, so it was regarded as Category 1 pursuant to the Notification of the Stock Exchange of Thailand Re: Acquisition or Disposal of Assets and the Company is required to prepare information memorandum to disclose to the Stock Exchange of Thailand as well as convene the shareholders meeting to consider and approve the entry into such transaction. The Company s Board of Directors Meeting No. 6/2014 on August 8, 2014 resolved to approve on such transaction and to propose to the Extraordinary General Meeting of Shareholders No. 1/2014 to be held on September 19, 2014 to consider and approve acquisition of 640,000,000 ordinary shares of Tong Hua Finnex Advisory Company Limited Page 6 / 97

10 Communications Public Company Limited. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders. When calculation value of transaction size pursuant to various criteria by using information from the consolidated financial statement of the Company for 3 month period ended on June 30, 2014 already reviewed by the Certified Public Accountant and the consolidated financial statement of TH for 6 month period ended on June 30, 2014 already reviewed by the Certified Public Account, transaction size appeared to be 28.88%. When combining transactions incurred during 6 months period before entry into this transaction, for instance, acquisition of 74,900,000 shares of Master Ad Public Company Limited ( MACO ) during May to June 2014 with total value of 681,150,000 Baht of which transaction size under total value of consideration criteria equaled to 24.85%, total transaction size now equal to 53.73% of total assets. Therefore, it is higher than 50% but lower than 100%, so it is regarded as Category 1 Transaction pursuant to Notification of the Stock Exchange of Thailand, consequently the Company is obligated to disclose information to the Stock Exchange of Thailand ( SET ) and to convene a shareholders meeting to request for approval on entry of such transaction. Such approval required to have not less than three-fourths of total votes of shareholders presented in the meeting and having voting right, excluding vote of stakeholders. When calculation of transaction size pursuant to Notifications on Asset Acquisition by referring to the consolidated financial statement of the Company for three month period ended on June 30, 2014 and the consolidated financial statement for six month period ended on June 30, 2014 pursuant to 4 calculation criteria, details obtained are as follows: Financial Data The Company Consolidated financial statement for 3 month period ended on June 30, 2014 (MBaht) TH Consolidated financial statement for 6 month period ended on June 30, 2014 (MBaht) Total Assets 3, , Intangible Assets Total Liabilities Total Shareholders Equity 2, Net Profit (Loss)* 1, (11.62) Minority Interest NTA** 2, Note : * Net profit (loss) for trailing 12 months. **NTA is calculated by deducting total assets with intangible asset, total liabilities and minority interest. Finnex Advisory Company Limited Page 7 / 97

11 Calculation Basis Calculation Method Transaction Size (%) 1 Net Total Asset (NTA) (NTA of TH pursuant to ratio of shares acquired / NTA of the Company Net Profit Net profit of TH pursuant to ratio of shares acquired / Net profit of the Company (0.29) 3 Total Value of Consideration Value of consideration paid/ total assets of the Company Value of Securities No. of shares to be issued for acquisition of assets / no. of issued and paid-up shares of the Company N.A. Note: * Referred to the consolidated financial statement of the Company as of June 30, 2014 and financial statement of TH as of June 30, Details of the Acquired Assets Assets to be acquired : Newly-issued ordinary shares of TH allotted to investors on private placement basis and the existing shareholders on right offering basis No. of assets to be acquired and proportion of shares after transaction : 640,000,000 newly-issued ordinary shares of TH at par value of 1.00 Baht per share, or equal to 27.06% of paid-up capital after capital increase of TH 1.5 Shareholding Structure after Transaction The Board of Directors meeting of TH held on August 8, 2014 passed a resolution on increase of registered capital TH from 759,998, Baht to 2,464,998, Baht by issuing 1,705,000,000 ordinary shares at par value of 1.00 Baht per share with specific purpose on capital increase, totally 1,705,000,000 Baht. Newly-issued ordinary shares will be offered as private placement as follows: (1) 640,000,000 of allotted shares will be offered at Baht per share to VGI Global Media Public Co., Ltd. (Private Placement), (2) 100,000,000 of allotted shares will be offered at Baht per share to Aqua Corporation Public Co., Ltd. (Private Placement), (3) 825,000,000 of allotted shares will be offered at Baht per share to the following private investors (Private Placement): 1. Mr. Nares Ngamapichon 100,000,000 shares 2. Mr. Wanchai Panvichien 100,000,000 shares 3. Mr. Pracha Damrongsuttipong 80,000,000 shares 4. Mr. Nuttapon Poolpoka 145,000,000 shares 5. Mr. Supalerk Vayakornvichitr 160,000,000 shares 6. Miss Nitnara Mintarkhin 40,000,000 shares Finnex Advisory Company Limited Page 8 / 97

12 7. Mr. Chong Rangsibrahmanakul 80,000,000 shares 8. Miss Pawasut Jotikasthira 50,000,000 shares 9. Mr. Raweerot Khiannilsiri 70,000,000 shares (4) 100,000,000 of allotted shares will be offered at Baht per share to the existing shareholders on a right offering basis pursuant to their shareholding proportion, (5) Consider to increase additional registered capital of 40,000, Baht by issuing 40,000,000 new ordinary shares at par value of 1.00 Baht to allot for right adjustment of TH-W1. If the issued and offered shares under private placement and right offering basis have been fully subscripted including full TH-W1 warrants, shareholders proportion of TH shall be as follows: Existing Shareholders No. of Shares % 1 Mrs. Kanlayanee Kyavatanakij 90,426, Mr. Somnuk Kyavatanakij 90,156, Mr. Wichai Tongtang 60,000, Mrs. Sumjalee Ongjarit 60,000, Mr. Akekavit Kamontepa 50,000, Mr. Tanomsak Sammawuttichai 20,686, Mr. Panurak Saengaram 20,000, Mr. Sukit Traiwavapong 10,000, Mr. Pongsak Suttisripok 10,000, Mrs. Duangnapa Tongsri 7,005, Mr. Akekavit Kamontepa 6,700, Miss Suntaree Piti 4,299, Thai NVDR Co., Ltd. 4,208, Mr. Kumpon Tatiyakawee 3,150, Mr. Charoon Leelakulvech 3,113, Others 260,253, Total Existing Shareholders 700,000, List of persons allocated for purchasing of ordinary shares of TH No. of Shares % 1 VGI Global Media Public Co., Ltd. (PP) 640,000, Aqua Corporation Public Co., Ltd. (PP) 100,000, Private investors 825,000, Existing shareholders (Right Offering) pursuant to shareholding proportion 100,000, Total allotted shares 1,665,000, Warrant No. of Shares % 1 Warrant (existing) 59,998, Allotment for right adjustment of TH-W1 (additionally allotted) 40,000, Total warrants 99,998, Total shares of TH in case all shares are fully subscribed 2,464,998, Finnex Advisory Company Limited Page 9 / 97

13 If the warrant rights have been fully exercised, the Company shall hold shares at approximately 25.96%, so the Company is obligated to prepare tender offer for purchase of all securities of TH, pursuant to the Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover. However, the Company does not wish to prepare tender offer to purchase all securities of TH, therefore, the Company shall proceed for waiver of tender offer of TH shares through resolution of the shareholder s meeting (Whitewash). 1.6 Total Value of Consideration and Basis to Determine Value of Consideration The Company shall enter the acquisition of 640,000,000 ordinary shares of TH at offered price of Baht per share, totaled value of 915,840, Baht. Payment shall be made upon all conditions precedent have been fulfilled. Basis to determine value of consideration of newly-issued ordinary shares of TH are purchase and sales price mutually agreed by the buyer and the seller based on investment worthiness including the support for advertisement network expansion of the Company. 1.7 Terms of Payment The payment for consideration shall be made to TH by cash upon all condition precedent have been fulfilled. The Company s sources of fund for payment of such consideration shall be cash flow from operating activities and/or loan from financial institution. 1.8 Source of Fund Source of fund for purchase newly-issued shares of TH shall be from cash flow from operating activities and/or borrowings from financial institutions. According to information stated in the Company s financial statement as of June 30, 2014 (as per details in Section 5: Attachments on General Information), the Company has cash and cash equivalent amounting to million Baht, temporary investments amounting to million Baht and revolving credit obtained from many financial institutions totaled 1, million Baht. 1.9 Transaction Conditions This transaction is the acquisition of newly issued securities of the listed company and it is issued and offered on private placement basis including offering of newly issued shares with prices offered lower than 90% of the market price, therefore, TH as the securities issuer is required to have approval from the shareholders meeting as per criteria specified in the relevant notifications by the Capital Market Supervisory Board. Moreover, such transaction is regarded as asset acquisition as per notification regarding assets acquisition, so when combining with assets transaction during the past 6 months before this transaction, size of total transactions as per total value of consideration criteria is more than 50%. Consequently, the Company must obtain approval from the Company s Finnex Advisory Company Limited Page 10 / 97

14 shareholders meeting not less than three-fourths of shareholders attending and eligible to vote, excluding the stakeholders vote. Additionally, such acquisition might be categorized as acquisition of shares of the business that is required to prepare tender offer of all securities of the business pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor. 12/2554 Re: Criteria, Conditions and Method on Holding of Securities for Business Takeover dated May 13, 2011 and the related amendments. Furthermore, the Company shall execute Share Subscription Agreement with TH and such agreement specified that share purchase transaction shall be subject to fulfillment of all conditions precedent, which shall include the followings: (1) The Company shall be granted approval from the Company s shareholders meeting on assets acquisition pursuant to Notifications of Assets Acquisition. (2) TH shall be granted approval from TH s shareholders meeting on capital increase and offering of 1,565,000,000 newly-issued ordinary shares as private placement basis including offering of new ordinary shares at price lower than 90% of market price, pursuant to Notification of the Capital Market Supervisory Board No. Thor Jor 28/2551. (3) The Company obtains tender offer waiver of all securities of TH through resolution of the shareholders (Whitewash), pursuant to rules of the Office of the Securities Exchange Commission. (4) TH completes the execution of agreement on purchasing of AA s shares from AQUA at ratio of approximately 74.00%. (5) TH disposes investments in THD at ratio of 81.00% and in Million Miles at ratio of 60.63% as well as cancels joint venture agreement in Spring News TV with the return of deposit amounting to 250,000, Baht together with opportunity cost of 12% per year. (6) The Company executes the Management Contract to manage business of AA concerning general management and administration Main Points of Draft Preliminary Memorandum of Understanding* Between : The Company and TH The Company : Wish to expand advertising media business TH : Wish to seek for joint investors to undertake advertisement media business Obligations of TH : 1. In order to comply with business expansion plan, TH shall decrease its registered capital by cancellation 400,000,000 unsold ordinary shares and increase registered capital by issuing 1,655,000,000 newly-issued ordinary shares with offered price of Baht per share. This offered price is allotted as private placement pursuant to resolution of the 2014 Annual General Meeting of Shareholders. It shall be allotted as private placement and right offering to the existing shareholders, by allotting to VGI amounting to 640,000,000 shares (approximately 27.06% of paid-up capital after capital Finnex Advisory Company Limited Page 11 / 97

15 Obligations of the Company increase of TH). 2. As VGI wishes to hold shares more than 25%, therefore, TH must convene the shareholders meeting to request for approval on waiver of tender offer pursuant to the Notification of the Office of Securities and Exchange Commission Ref. No. Sor Jor. 36/ Prior to purchasing of capital increase pursuant to Item 1, TH agrees to dispose other businesses, so that outdoor advertisement media business shall be its sole core business, except publishing business which shall be kept at ratio not exceeding 19%. TH shall use money obtained from issuance and offering of newly-issued ordinary shares, amounting to million Baht to purchase shares of Aqua Ad Public Co., Ltd. at ratio of approximately 74% of total issued and paid-up capital of Aqua Ad at offered price of Baht per share. : 1. To be responsible for management on sales & marketing, cost & expense management, organizational management & administration and financial management to add value to the joint venture. TH shall appoint VGI to manage sales and marketing of TH and business solely invested by TH to add value to the joint venture. 2. VGI shall receive remuneration for management work according to details specified in Management Contract of each business to be mutually agreed, so that it shall be corresponding to each business to be invested. For business management of Aqua Ad Public Co., Ltd., remuneration obtained by VGI shall be sum of (i) 5% of total income per year and (ii) 50% of net income increased from net income of previous year. * Net income means total income after deduction of relevant expenses, which shall include cost of sales and services, selling and administrative expense and financial costs. 3. Since VGI is also the shareholder of MACO who operates outdoor advertisement media business, so VGI shall try to create synergy for the best interest of all party. In addition, both parties acknowledge that the above conditions are related transaction and it is required to have approval from the shareholders meeting of TH. Moreover, remuneration to be incurred under Item 2 shall become effective in Finnex Advisory Company Limited Page 12 / 97

16 1.11 Main Points of Management Contract Execution Date : After the date TH has been granted approval from the Extraordinary General Meeting of Shareholders No. 1/2514 to be held on September 22, 2014 with vote of not less than three-fourths of total votes of shareholders presented at the meeting and eligible to vote, excluding shareholders who are stakeholders and after the Company purchases shares of AA. Service Provider : The Company, VGI Customer : Aqua Ad Public Co., Ltd., AA Main points of contract : 1. To be responsible for management on sales & marketing, cost & expense management, organizational management & administration and financial management to add value to the joint venture. TH shall appoint VGI to manage sales and marketing of TH and business solely invested by TH to add value to the joint venture. 2. VGI shall receive remuneration for management work according to details specified in Management Contract for each business to be mutually agreed, so that it shall be corresponding to each business to be invested. For business management of Aqua Ad Public Co., Ltd., remuneration to be obtained by VGI shall not be higher than the sum of: (i) 5% of total income per year, and (ii) 50% of net income* increased from net income of previous year * Net income means total income after deduction of relevant expenses, which shall include cost of sales and services, selling and administrative expense and financial costs. 3. In addition, the term of Management Contract to be executed by both parties shall be 5 year each and VGI shall have rights of first refusal Obligations and Legal Disputes of Tong Hua According to financial statement of TH for the 6 month period as of June 30, 2014 which has been reviewed by the Certified Public Accountant, it stated that during 2013, its subsidiary (MM) has been accused as codefendant in civil case about where the subsidiary s truck collided with passenger van in Rayong Province and there were many injured persons caused by this accident. Total claim requested for this case was approximately 37.8 million Baht. Presently, it is under process for evidence examination and it has not yet been finalized. Therefore, the Company has not yet recorded damages which might be incurred in the financial statement. Finnex Advisory Company Limited Page 13 / 97

17 However, the Board of Directors meeting No. 3/2014 held on July 27, 2014 has unanimously resolved to dispose ordinary shares of such subsidiary within 15 days after the Board of Directors approval for such shares disposal Related Transactions between the Company and Tong Hua According to the financial statement of VGI Global Media Public Co., Ltd for the period ended June 30, 2014, the Company and TH did not have undertake any related transaction. However, after acquisition of newly-issued ordinary share of TH pursuant to details in the abovementioned Management Contract, it shall be regarded as connected transaction which shall become effective in 2015 and such transaction is required to have an approval from the shareholders meeting of TH. Finnex Advisory Company Limited Page 14 / 97

18 Part 2: Reasonableness of Transactions 2.1 Objectives and Necessity of Transactions As one of strategic plans of the Company is to expand to new business both within the country and abroad by taking into consideration the potential investment projects as well as selection strong strategic partner including emphasis on investment in business it has specialized knowledge. These factors shall contribute to sustainable growth of the Company in the long run and any consideration shall be mainly based on the best interests of the Company and its shareholders. As such, the Company sees prospective opportunity and potential growth on expansion of business into Out of Home media and Billboard businesses. Therefore, on May 12, 2014, the Company decided to invest in Master Ad Public Co., Ltd. ( MACO ), a leading Out of Home Media business operator and a listed company, by purchasing 73,500,000 shares from MACO s existing shareholders at par value of 1.00 Baht per share, accounting for 24.43% of paid-up capital of MACO because the Company deemed that MACO has experienced and capable management team in Out of Home Media business (currently, the Company holds 74,900,000 shares in MACO or 24.89% of paid-up capital of MACO). This transaction shall increase business expansion potential of Out of Home Media as well because TH has a policy to keep its newspaper business at ratio of 19% and to dispose its other businesses. Part of money obtained from disposition of TH s other business and from offering of newly-issued ordinary shares allocated as private placement to private investors and right offering to existing shareholders shall be used to purchase shares of Aqua Ad Public Co., Ltd. ( AA ) at ratio of approximately 74% of issued and paid-up capital. AA engages in media advertisement business, particularly billboard business, with a fast growing. It has been trusted from customers from its work and after sales services, including quality of team work, so AA becomes one of the leading companies in the billboard market within a short time. Vision of AA is Becoming one of the top advertising media company in Thailand and Asian Pacific Region and determining to become fully integrated and well-known advertising media company by applying outstanding, extinguishing innovation and design and render satisfaction results to the customers in parallel with environment preservation. Finnex Advisory Company Limited Page 15 / 97

19 When comparing with directly investment in AA, purchasing new ordinary shares of TH shall be more beneficial to the Company because investment in AA shall make the Company have more billboard media only, while total money gained from capital increase of TH shall be approximately 2, million Baht (consisting of Baht from the Company, million Baht from AQUA, 1, million Baht from 9 individual investors and million Baht from the existing shareholders). Consequently, TH shall have adequate cash flow to change its existing business structure from publication business into advertising media service rendering and production business. Preliminary, TH shall use approximately million Baht from such capital increase to purchase shares of AA and the remaining cash flow shall be used to invest in potential and relevant projects with prospective growth. This strategy is corresponding to the Company s policy which is to expand investments in Out of Home Media and other relevant media. As a result, investment in TH shall allow the Company to have various types of advertising media service networks, increased number of billboards or additional investment projects in the future which can lead to higher market shares arising from synergy on sales which the Company has keen experiences and expertise in this field. All of these factors shall contribute to increased rate of returns to the Company s shareholders in the long term. 2.2 Advantages and Impact from Entering into Transactions This newly-issued share purchasing transaction of TH is in line with the strategic policy of the Company on expansion of Out of Home Media networks because it can increase diversity of advertising media of the Company. Out of Home Media managed by Aqua Ad is located in good locations which covering areas both in Bangkok and provinces, with continued business expansion. Aqua Ad also has experienced team work in this field with excellent business performance for a long time. Benefits expected to be gained from this transactions are as follows: Advantages from Entering into Transaction (1) To expand network and increase advertising areas of the Company to Out of Home Media. The Company has 170 billboard structures from previous investment in MACO and if it invests in TH, it will have 145 additional billboard structures, or accounting for 315 billboard structures in total. These billboards are installed in Bangkok and provinces throughout the country. The increase number of billboard shall increase target customer base which can better respond to the markets need and it can make the service users have more options for purchasing media. (2) TH shall have more than 2,000 million Baht from this registered capital increase, so it shall make TH have adequate working capital to invest in potential projects with good prospect and to grow business in the future, apart from investment in purchasing ordinary shares of AA pursuant to its business restructuring policy which shall focus on manufacturing, service rendering and rental of advertising media areas. (3) After TH purchases AA s shares, the Company shall manage AA s business pursuant to Management Contract by responsible for management, sales & marketing, cost and expense management, organizational management and administration, financial management to add value to AA. As a result, it shall generate more income to AA with continued profit growth, which can lead to higher profit sharing or dividend and Finnex Advisory Company Limited Page 16 / 97

20 even overall performance growth for the Company on continued basis, besides from receiving income from Management Contract during 5 year period ( ), so total remuneration gained shall be at approximately million Baht. (4) To build business relationship between the Company and AA to increase additional accessible means to the market and target group customers of AA. It can provide opportunity to have the increased market shares on Out of Home Media for the Company and AA. Total value of Out of Home Media (consisting of billboard, mobile media and in-store media) in 2012 was 10, million Baht (dividing into share of the Company for approximately 30.97%, of MACO for approximately 7.13% and for AA for approximately 3.90%). Thus, AA shall have constant growing income and profit and TH shall have profit sharing and dividend (according to previous record in the annual report, AA always paid dividend at the rate of Baht per share, Baht per share and Baht per share during respectively), so it can lead to the continued growth of overall performance of TH and favorable results to the Company as the shareholder. (5) Offering price for newly-issued ordinary share of TH at Baht per share is lower than market price (lower than 90% of weight average prices of TH shares in the Stock Exchange of Thailand backdated for 7 consecutive business days or during July 30, 2014-August 7, 2014 before the Board of Directors of TH passed a resolution for such transaction which equaled to 3.05 Baht per share. However, since there are 1,665,000,000 new ordinary shares issued and offered this time, so it might have impact to the shareholders with regards to price dilution under assumption that TH can sell all of newly-issued ordinary shares as private placement and as right offering to existing shareholders. As such, price dilution shall be equaled to 37.37%, which shall make market price after this offering equals to 1.91 Baht per share. Nonetheless, the Company still can enjoy benefits from difference of such prices later after consideration on results of price dilution. (6) The Company s performance has more tendency to grow from synergy on sales and management between the Company and AA because AA s teamwork has experiences and expertise in Out of Home Media as can be witnessed from its constant profitability. Therefore, when combining management skills of the Company s management team with AA s team, advertising media business run effectively and it can make AA have constant revenue and profit, and it can yield profit sharing or dividend and better overall performance for the Company. Impacts from Transaction (1) The Company shall be burdened with interest paid for loan repayment to the financial institute, in case such loan is used as source of fund for transaction of TH s newly-issued ordinary shares. (2) The Company may lack liquidity or has inadequate cash flow for undertaking current business operations or for investment in the future projects pursuant to its business operation plan of the Company. Nonetheless, the Company has adequate credit loan amount from the financial institute as well as has capability to create positive cash flow which can reduce this impact. Finnex Advisory Company Limited Page 17 / 97

21 2.3 Comparison of Advantages and Impacts of Not Entering into Transaction Advantages from not entering into transaction (1) The Company shall not have any burden from loan repayment and interests expenses incurred from such loan because source of fund for purchasing of newly-issued ordinary shares come from working capital and/or loan from financial institution that the Company has credit amount. (2) The Company shall still have financial liquidity and cash flow to be used as working capital for undertaking main business at present as well used as capital for other investment projects in the future because the Company does not have to pay a large sum of money for such capital increase ordinary share in one stance. (3) The Company shall not have any risks performance of TH does not achieve as per estimated which might be impacted to the Company s performance in the future. Impact from not entering into transaction (1) The Company may lose opportunity on network expansion and increase of its advertising areas to Out of Home Media located in Bangkok and provincial areas throughout the country. (2) The Company may lose opportunity to receive remuneration from management in AA pursuant to Management Contract and it shall make to Company unable to receive profit sharing from AA s operations which might impact to overall performance of the Company. (3) The Company may lose opportunity to expand or increase market shares in Out of Home Media business. (4) The Company may lose opportunity to build relationship with business partner which shall make it unable to enter into the targeted market and customer groups or business plan projected. (5) The Company may lose opportunity to receive remuneration from investment in business with potential on competitive potential and growth in the future. (6) The Company may lose opportunity to diversify source of income to Out of Home Media business, which is one of methods that can help reducing its business operation risks. 2.4 Risks of Entering into Transaction Permit for billboard construction Core business of AA is to provide services on billboard rental area, acquiring area, hired for construction and installation of various type of advertisement, by emphasizing on outdoor advertising and billboard which are installed in Bangkok and in provinces. These billboard structures consist of those constructed by the Company and those are bought by the Company. About 40% of such billboard structures have construction permits pursuant to Building Control Act B.E and 60% of such billboards have insufficient document because they were purchased from existing owners which have incomplete document storage system and some of them have not been applied for construction permit at all. Therefore, they are regarded as the Company s risk in case such ill-equipped billboard have been inspected or forced to dismantle, which can lead to significant reduction of operating performance of AA. Finnex Advisory Company Limited Page 18 / 97

22 However, during the past period, AA did not encounter any problem on being forced by the government authorities to dismantle billboards. In addition, AA has regulated the practical guidelines regarding billboards, for instance, pay tax for billboard that can generate income every year, execute insurance for all billboards continually, inspect stability pursuant to the related Acts then requested the Billboard Association to certify stability of its billboards every year as well as plan and conduct maintenance of billboards to expand their usage life. Moreover, the management also closely follows up news and information on the relevant laws so that they can proceed for permit request correctly as well as consider to invest in the billboard which have permits to avoid risk specified in this case. Ability to renew leased areas contract for billboard installation Most billboards of AA installed on land or buildings whose ownership rights do not belong to AA and most of them have lease contract or sub-lease contract with term not exceeding 3 years. Therefore, the Company may have risks if the owners of such areas or buildings revoke lease contract or sub-lease contract as it shall impact income of AA and the Company. However, the management of AA prevented this risk by entering into lease contracts with conditions that either party can request for contract renewal or in case of termination, advance notice must be sent in advance. Additionally, most of leased areas for billboard installation cannot be used for other appropriated benefits. Therefore, it is quite unlikely that such lease contracts shall be revoked. Transaction Conditions Before the Company enters into transaction for purchasing of newly-issued ordinary shares of TH, the Company is required to enter into share subscription contract with TH and in order to achieve requirements under such share subscription contract, 6 main conditions precedent specified in Transaction Conditions topic must be fulfilled. Those conditions are that all relevant companies must convene shareholders meeting and must obtain approval not less than three-fourths of votes from the shareholders presented and eligible to vote, excluding votes of the stakeholders. In case the shareholders of any relevant company do not approve for any transaction specified in such condition precedent, this transaction shall not be achieved as planned, so all relevant expenses incurred from this transaction shall be wasted. Nevertheless, the management of each relevant company jointly attended meetings and planned for this transaction to reduce risks which might be incurred and it is expected all conditions precedent shall be fulfilled and obtained approval from shareholders of each relevant company. Change of Advertisement Trend in Digital and Online Era According to overall picture of advertisement industry, television advertisement media still possesses main proportion of 60% of total advertisement budget and it is expected that growth of advertisement trend in this year shall not be more than 3-5% under peaceful political conditions. Companies that shall spend the highest budget in advertisement are consumer product companies, i.e. beverage, Finnex Advisory Company Limited Page 19 / 97