DECLOUT LIMITED (Incorporated in the Republic of Singapore on 21 August 2010) (Company Registration No W)

Transcription

1 DECLOUT LIMITED (Incorporated in the Republic of Singapore on 21 August 2010) (Company Registration No W) PROPOSED ACQUISITION OF ASIA WIRING SYSTEMS PTE LTD 1. INTRODUCTION The board of directors (the Directors or the Board ) of DeClout Limited (the Company or DeClout and together with its subsidiaries, the Group ) wishes to announce that the Company has entered into a sale and purchase agreement dated 30 June 2014 (the Agreement ) with its wholly-owned subsidiary, Beaqon Pte. Ltd. (the Purchaser ), Mr. Poh Teck Boon and Mr. Ang Say Cheong (collectively, the Vendors and each, a Vendor ). The Vendors are not related to the Directors or controlling shareholders of the Company or their respective associates. Pursuant to the Agreement, the Purchaser has agreed to purchase from the Vendors the entire issued and paid-up share capital of Asia Wiring Systems Pte Ltd (the Target and together with its subsidiaries and associated companies, the Target Group ) ( Sale Shares ), for a total consideration of approximately S$11.5 million (the Aggregate Consideration ), on the terms and subject to the conditions contained in the Agreement (the Proposed Acquisition ). 2. INFORMATION ON THE TARGET The Target is a Singapore-incorporated company with an issued and paid-up share capital of S$200,000 comprising 200,000 ordinary shares. The Target Group is a one-stop solutions provider that serves data centre and building owners through the direct or indirect provision of value added services as well as energysaving, wiring, communication and networking products ( Products ). It is also an authorized distributor for some of these Products in Southeast Asia. The Target Group has operations in Singapore, Malaysia, Indonesia and Thailand. Based on the proforma accounts of the Target Group as at 31 December 2013, each of the net asset value ( NAV ) and net tangible asset (excluding minority interests) of the Target Group stood at approximately S$14.2 million. The net profit after tax of the Target Group (excluding minority interest) for the financial year ended 31 December 2013 ( FY2013 ) was approximately S$0.6 million. No independent valuation was conducted on the Target Group. The structure of the Target Group before the acquisition and after the Proposed Acquisition are set out in Appendix A and B respectively of this announcement. 3. PRINCIPAL TERMS OF THE PROPOSED ACQUISITION 3.1 Consideration The Aggregate Consideration of approximately S$11.5 million was arrived at on a willingbuyer and willing-seller basis, after negotiations which were conducted at arm s length between the parties, and takes into account, inter alia, the NAV and net profit before tax of the Target Group based on its proforma accounts for FY2013. The Aggregate Consideration shall be payable in three (3) tranches as set out in Table 1 below and the cash component shall be funded by internal resources. 1

2 Table 1 Name of Vendor Number of Sale Shares sold Aggregate Consideration First Tranche Consideration Second Tranche Consideration Third Tranche Consideration Poh Teck 160,000 S$9.2 million S$5.2 million S$2.0 million S$2.0 million Boon Ang Say 40,000 S$2.3 million S$1.3 million S$0.5 million S$0.5 million Cheong Total 200,000 S$11.5 million S$6.5 million S$2.5 million S$2.5 million First Tranche Consideration The consideration for the first tranche (the First Tranche Consideration ) shall be an aggregate of approximately S$6.5 million, which shall be satisfied in full in the following manner: (i) (ii) on the date of completion ( Completion Date ), a cash payment of S$2.5 million; and within three (3) months from the Completion Date, the issuance and allotment of 14,134,275 new shares in the capital of the Company ( Shares ) and/or transfer of such number of treasury shares of the Company (as the case may be) (the DC1 Shares ) to the Vendors based on their proportionate share of the Sale Shares as set out in Table 2 below, representing an aggregate consideration of approximately S$4.0 million, based on an issue price of S$0.283 per DC1 Share (the Issue Price ), being the higher of: (I) (II) the average of the closing price for the five (5) market days immediately preceding the day on which the Agreement is signed; or the volume-weighted average price of the Shares for trades done on the SGX-ST on the day on which the Agreement is signed. Table 2 Name of Vendor Number of Sale Shares sold Number of DC1 Shares Number of DC2 Shares Number of DC3 Shares Poh Teck Boon 160,000 11,307,420 7,067,138 7,067,138 Ang Say Cheong 40,000 2,826,855 1,766,784 1,766,784 Total 200,000 14,134,275 8,833,922 8,833,922 (Collectively, the DC1 Shares, the DC2 Shares and the DC3 Shares shall be referred to as the DC Shares.) Second Tranche Consideration The consideration for the second tranche (the Second Tranche Consideration ) shall be an aggregate of approximately S$2.5 million, which shall be satisfied within eight (8) weeks after the rectification, undertaking and/or completion of certain items agreed to be rectified ( Rectification Items ) by way of the issuance and allotment of 8,833,922 new Shares and/or transfer of such number of treasury shares of the Company (as the case may be) (the DC2 Shares ) to the Vendors based on their proportionate share of the Sale Shares as set out in Table 2 at the Issue Price Third Tranche Consideration The consideration for the third tranche (the Third Tranche Consideration ) shall be an aggregate of approximately S$2.5 million, which subject to the rectification, undertaking and/or completion of all Rectification Items to the satisfaction of the Purchaser, shall be satisfied within three (3) months from the date of the audited report for the Target Group for the financial year ending 31 December 2016 ( 2016 Audited Report ) in the following manner: 2

3 (i) (ii) in the event that on or before the date of the 2016 Audited Report, (i) DeClout intends to undertake a trade sale of its interest in the Purchaser (the Trade Sale ); or (ii) the Purchaser intends to undertake a listing of its shares on any stock exchange (the Listing ), the issuance and allotment of such number of new shares and/or the transfer of such number of treasury shares in the capital of the Purchaser (the Beaqon Shares ), at an issue price per Beaqon Share equivalent to the net tangible asset per share of the Purchaser based on the consolidated audited financial statements for the Purchaser and its subsidiaries for the financial year ending 31 December 2016, for an aggregate consideration of approximately S$2.5 million, to the Vendors based on their respective share of the Sale Shares as set out in Table 1; or in the event that the Trade Sale and/or the Listing does not occur on or before the date of the 2016 Audited Report, the Third Tranche Consideration shall, at the discretion of the Vendors, be satisfied by way of either: (a) (b) a cash payment of S$2.5 million; or the issuance and allotment of 8,833,922 new Shares and/or transfer of such number of treasury shares of the Company (the DC3 Shares ) to the Vendors based on their proportionate share of the Sale Shares as set out in Table 2 at the Issue Price, representing an aggregate consideration of approximately S$2.5 million. The Company will make an application to the Sponsor (as defined herein) and the SGX-ST for the listing and quotation of the DC Shares on Catalist. The Company will make the relevant announcement upon receipt of the listing and quotation notice from the SGX-ST. The DC Shares or the Beaqon Shares will, upon issuance and allotment, rank pari passu in all respects with the ordinary shares of the Company or the ordinary shares of the Purchaser (as the case may be) existing at the date of the issuance of the DC Shares or the Beaqon Shares (as the case may be), save that neither the DC Shares nor the Beaqon Shares will rank for any dividend, right, allotment or other distributions declared, the record date for which falls on or before the date of issuance and allotment of the DC Shares or the Beaqon Shares (as the case may be) Issuance of the DC Shares As at the date of this announcement, the Company has an issued and paid-up share capital of 314,061,520 Shares and has no treasury shares. Assuming that (i) the Trade Sale or the Listing does not occur; and (ii) the Vendors elect to receive the DC3 Shares, an aggregate of 31,802,119 DC Shares will be issued and allotted, and the Company will have an enlarged issued share capital comprising 345,863,639 Shares. The 31,802,119 DC Shares represents approximately 10.1% and 9.2% of the existing and enlarged issued share capital of the Company respectively. Following the issuance of the DC Shares, the Vendors shareholdings in the Company are as follows: Vendor Number of DC Shares Percentage of enlarged share capital Poh Teck Boon 25,441, % Ang Say Cheong 6,360, % The DC Shares are to be issued pursuant to the existing share issue mandate approved by shareholders of the Company at its annual general meeting. 3.2 Conditions Precedent Pursuant to the terms of the Agreement, completion of the Proposed Acquisition is conditional upon the following conditions being satisfied or waived: 3

4 (a) (b) approval from the board of directors and shareholders of the Purchaser and/or DeClout as may be required for the Proposed Acquisition; and the Vendors representations and warranties being true and accurate in all material respects as at the date of the Agreement and the Completion Date. As of the date of this announcement, all conditions precedent has been satisfied and the Sale Shares have been transferred to the Purchaser. Accordingly, the Proposed Acquisition has been completed. As at the date of this announcement, the Purchaser has made payment for S$2.5 million as part of the First Tranche Consideration. 3.3 Post-Completion NTA The Vendors jointly and severally undertake that in the event that, following the due diligence undertaken by the Company and the Purchaser (whether legal, financial and/or otherwise), any downward adjustments need to be made to the audited net tangible assets of the Target Group as at 31 December 2013 (the 2013 NTA ) or there exists any situation which may require any downward adjustments to be made to the 2013 NTA, the Vendors (the Adjustment ) shall (i) inject such assets equivalent to the value of the Adjustment acceptable to the Purchaser; (ii) rectify any such situations which give rise to such Adjustment; and/or (iii) waive all or part of the Vendors Loan (as defined below), by 31 December 2014 to the satisfaction of the Purchaser. For the avoidance of doubt, the Adjustment is made on a dollar for dollar basis. The extent of the Adjustment shall be determined by an independent Singapore certified public accountant firm appointed by the Purchaser with the Vendors consent (such consent not to be unreasonably delayed or withheld) (the Independent CPA ), provided that such certified public accountant firm shall not be the auditor of either the Group and/or the Target Group. The parties agree that the Independent CPA shall be acting as an expert and not as an arbitrator, whose decision as to the Adjustment shall be final and conclusive and no certification by the Independent CPA in such circumstances shall be necessary NTA The Vendors jointly and severally undertake that in the event that the audited net tangible asset (excluding minority interests and certain pre-agreed adjustments) of the Target Group as at 31 December 2016 (the 2016 NTA ) is less than S$15.0 million, they shall inject such assets acceptable to the Purchaser to make up the shortfall Existing Vendors Loan In respect of the interest-free shareholders loan made by the Vendors to the Target amounting to approximately S$1.4 million (the Vendors Loan ) as at 31 December 2013, the Vendors jointly and severally undertake that: (a) (b) they shall not, without the consent of the Purchaser, call for the repayment of the Vendors Loan on or prior to 31 December 2016; and any calls for repayment of the Vendors Loan after 31 December 2016 shall only be made if the Target has excess working capital generated from the Target Group in the reasonable discretion of the Purchaser Hong Kong Entity As at the date of the Agreement, the Target is the 55% shareholder of AWS (Hong Kong) Co. Limited, an entity incorporated in Hong Kong, and which has been dormant since incorporation on 28 September 2001 (the HK Entity ). The Vendors jointly and 4

5 severally undertake that they shall acquire, or procure the acquisition, of the HK Entity by 31 December 2014, for a nominal consideration, such that the Target will cease to be a shareholder of the HK Entity Indonesian Entity As at the date of this Agreement, the Target is the 90% shareholder of PT AWS, an entity incorporated in Indonesia ( Indonesia Entity ). Mr. Ang Say Cheong is the remaining 10% shareholder of the Indonesia Entity. Mr. Ang Say Cheong undertakes that he shall transfer his shares in the Indonesian Entity to the Target or such other person nominated by the Purchaser by 31 December 2014 for a nominal consideration, such that Mr. Ang Say Cheong will cease to have any interest in the Indonesia Entity Appointment of Directors to the Target Group The Vendors jointly and severally undertake to procure the appointment of three (3) persons as the Purchaser may nominate as directors of the Target, and to procure the appointment of such persons as the Purchaser may nominate as directors of the entities within the Target Group. 4. RATIONALE FOR THE PROPOSED ACQUISITION The Purchaser, a wholly-owned subsidiary of the Company, designs, builds and delivers wired and wireless telecommunications infrastructure directly and indirectly to telecommunications services providers and data centre providers in Singapore. The Board believes that the Proposed Acquisition is synergistic and complementary to the existing business offerings of the Purchaser which will continue post-acquisition. It also believes that the Proposed Acquisition will: (i) (ii) (iii) enable the Purchaser to leverage the Target Group s key distributorships and customer relationships to move up the value chain to provide both the products and relevant services directly to telecommunication companies, data centres, and their respective subcontractors; open up new market opportunities for the Purchaser and the Group in countries which it currently does not have operations; and create opportunities to cross-sell the products and service offerings of other IT infrastructure services business units of the Group to the Target Group s current customer base. 5. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The proforma financial effects are presented for illustration purposes only and are not intended to reflect the actual future financial situation of the Company after the completion of the Proposed Acquisition. Such proforma financial effects have been computed based on the (1) audited consolidated financial statements of the Group for FY2013 adjusted for (i) the restructuring of the Group pursuant to which the entire share capital of ASVIDA Asia Pte. Ltd. was transferred from the Company to Procurri Corporation Pte. Ltd. ( Procuri Corp ) (the Group Restructuring ); (ii) the investment of 51% interest in Tinglobal Holdings Limited (the Investment in Tinglobal ); (iii) the issuance of 2,000,000 series A preferred shares of Corous360 Pte Ltd (the Subscription ); (iv) the issuance of 3,940 ordinary shares in the capital of Procurri Corp (the Issuance of Procurri Corp Shares ); (v) the acquisition of Verity Solutions Sdn Bhd 5

6 ( Acquisition of Verity ); and (2) the audited financial statements of the Target Group for FY2013 as well as the following assumptions: (a) the Vendors have elected to receive the Third Tranche Consideration in the form of DC3 Shares; (b) the positive NTA and profit after tax of AWS. Wire Works (Thailand) CO., LTD., which is not material, have been excluded; and (c) the expenses incurred in relation to the Proposed Acquisition is approximately S$165, Net Tangible Assets Assuming that the Proposed Acquisition had been completed on 31 December 2013, the effect on the net tangible asset ( NTA ) per Share as at 31 December 2013 will be as follows: Before the Proposed Acquisition After the Proposed Acquisition NTA attributable to shareholders of the Company (S$ 000) 19,930 31,583 Number of Shares ( 000) 314, ,864 NTA per Share attributable to shareholders of the Company (cents) Earnings per Share Assuming that the Proposed Acquisition had been completed on 1 January 2013, the effect on the earnings per Share ( EPS ) for FY2013 will be as follows: Before the Proposed Acquisition After the Proposed Acquisition Net profit after tax attributable to shareholders of the Company (S$ 000) 933 1,402 Weighted average number of Shares ( 000) 244, ,819 EPS (cents) Gearing There is no material impact on the gearing ratio of the Company arising from the Proposed Acquisition. 6. RELATIVE FIGURES UNDER RULE 1006 Based on the Group s audited consolidated financial statements for FY2013, the proforma accounts of the Target Group for FY2013 as well as the management accounts of Tinglobal Holdings Limited and Verity Solutions Sdn Bhd, the relative figures for the Proposed Acquisition computed on the bases set out in Rule 1006 of the Listing Manual Section B: Rules of Catalist (the Catalist Rules ) of the SGX-ST are as follows: Bases in Rule 1006 Relative Figures (a) Net asset value of the assets to be disposed of, compared with the Group s net asset value 6 Not applicable

7 (b) (c) (d) (e) Net profits attributable to the assets to be acquired, compared with the Group s net profits Aggregate value of the consideration given, compared with the Company s market capitalisation Number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue Aggregate volume or amount of proven and probable reserves to be disposed of, compared with the aggregate of the Group's proven and probable reserves 174.9% (1) 12.8% (2) 10.1% (3) Not applicable Notes: (1) The Group s FY2013 net profit before tax after adjusting for (i) the Group Restructuring; (ii) the Investment in Tinglobal; (iii) the Subscription; (iv) the Issuance of Procurri Corp Shares; and (v) the Acquisition of Verity, was approximately S$0.5 million. The Target Group s FY2013 net profit before tax attributable to owners of the Target (excluding the profit from AWS. Wire Works (Thailand) CO., LTD.) was approximately S$0.9 million. (2) The Company s market capitalisation of approximately S$89.9 million was computed based on the Company s existing issued share capital of 314,061,520 Shares and the volume-weighted average price of the Shares of S$ on 27 June 2014, being the market day preceding the date of the Agreement. (3) On the assumption that (i) the Trade Sale or the Listing does not occur; and (ii) the Vendors elect to receive the Third Tranche Consideration in the form of DC3 Shares, the Company will issue and allot an aggregate of 31,802,119 DC Shares. Having regard to the above, as one of the relative figures set out above exceeds 100%, the Proposed Acquisition would constitute a very substantial acquisition transaction or reverse takeover under Rule 1015 of the Catalist Rules. However, pursuant to Rule 1015(8) of the Catalist Rules, as the Proposed Acquisition is an acquisition of a profitable asset and the only limit breached is Rule 1006(b) of the Catalist Rules; and that the Directors, after making due enquiries, are of the opinion that the Proposed Acquisition does not change the Group s risk profile in accordance with Practice Note 10A of the Catalist Rules, shareholders' approval is not required for the Proposed Acquisition. 7. DIRECTORS SERVICE CONTRACTS No person is proposed to be appointed as a director of the Company in connection with the Proposed Acquisition. Accordingly, no service contract is proposed to be entered into between the Company and any such person in connection with the Proposed Acquisition. 8. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS None of the Directors or the substantial shareholders of the Company or their respective associates has any interest, direct or indirect, in the Proposed Acquisition, other than through their respective shareholdings in the Company. 9. DOCUMENT AVAILABLE FOR INSPECTION The Agreement is available for inspection during normal business hours from 9.00 am to 5.00 pm at the registered office of the Company at 29 Tai Seng Avenue, #05-01 Natural Cool Lifestyle Hub, Singapore for a period of three (3) months from the date of this announcement. 7

8 10. ANNOUNCEMENTS Further announcements on the Proposed Acquisition will be made in due course as and when appropriate. 11. RESPONSIBILITY STATEMENT The Directors collectively and individually accept full responsibility for the accuracy of the information given in this announcement and confirm, after making all reasonable enquiries, that to the best of their knowledge and belief, this announcement constitutes full and true disclosure of all material facts about the proposed Acquisition, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this announcement misleading. Where information in this announcement has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this announcement in its proper form and context. BY ORDER OF THE BOARD DECLOUT LIMITED Wong Kok Khun Chairman and Group Chief Executive Officer 30 June 2014 This announcement has been prepared by the Company and its contents have been reviewed by the Company s sponsor ( Sponsor ), Canaccord Genuity Singapore Pte. Ltd., for compliance with the relevant rules of the SGX-ST. The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made, or reports contained in this announcement. The contact person for the Sponsor is Ms Karen Soh, Managing Director, Corporate Finance, Canaccord Genuity Singapore Pte. Ltd. at 77 Robinson Road #21-02 Singapore , telephone (65)

9 APPENDIX A (TARGET GROUP BEFORE THE PROPOSED ACQUISITION) Asia Wiring Systems Pte Ltd 100% MultiData 60% AWS (M) 100% AWS (PG) 90% 100% 55% PT. AWS Asia Wiring Systems Pte Ltd. (Yangon Branch) AWS (Hong Kong) Co. Limited 49% AWS. Wire Works (Thailand) CO., LTD. 40% AWS Phils. Corp. APPENDIX B (TARGET GROUP AFTER THE PROPOSED ACQUISITION) Asia Wiring Systems Pte Ltd 100% MultiData 60% AWS (M) 90% 100% 49% PT. AWS Asia Wiring Systems Pte Ltd. (Yangon Branch) AWS. Wire Works (Thailand) CO., LTD. 40% AWS Phils. Corp. 100% AWS (PG) 9