VIVOCOM INTL HOLDINGS BERHAD ("VIVOCOM" OR THE "COMPANY") PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE TOTAL NUMBER OF ISSUED SHARES OF VIVOCOM (EXCLUDING TREASURY SHARES) ("PROPOSED PRIVATE PLACEMENT") 1. INTRODUCTION On behalf of the Board of Directors of Vivocom ("Board"), RHB Investment Bank Berhad ("RHBIB") wishes to announce that the Company proposes to undertake a private placement of up to 10% of the total number of issued shares of Vivocom to third party investors to be identified later. Further details of the Proposed Private Placement are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT The Company had obtained the approval from its shareholders at the last annual general meeting ("AGM") convened on 8 June 2017, whereby pursuant to Section 75 and Section 76 of the Companies Act 2016, the Board has been authorised to issue new shares in Vivocom provided that the number of new Vivocom shares does not exceed 10% of the total number of issued shares of the Company ("General Mandate"). The authority under the General Mandate is expected to continue to be in force until the conclusion of the next AGM of the Company. 2.1 Placement size The Proposed Private Placement involves an issuance of up to 10% of the total number of issued ordinary shares of Vivocom ("Vivocom Share(s)" or "Share(s)"). As at 19 June 2017, being the latest practicable date of this announcement ("LPD"), the total number of issued shares of Vivocom was 3,234,221,413 Vivocom Shares. In addition, as at the LPD, Vivocom has a total of 626,145,878 outstanding warrants 2013/ 2018 ("Warrant(s) B"), 250,367,513 outstanding warrants 2015/ 2020 ("Warrant(s) C") and 240,824,301 outstanding warrants 2015/ 2020 ("Warrant(s) D"). Each Warrant B carries the entitlement to subscribe for 1 new Vivocom Share during the 5 year exercise period of the Warrants B up to 8 September 2018 at an exercise price of RM0.20 per Warrant B. Each Warrant C carries the entitlement to subscribe for 1 new Vivocom Share during the 5 year exercise period of the Warrants C up to 22 January 2020 at an exercise price of RM0.10 per Warrant C. Each Warrant D carries the entitlement to subscribe for 1 new Vivocom Share during the 5 year exercise period of the Warrants D up to 8 July 2020 at an exercise price of RM0.10 per Warrant D. Assuming all the outstanding 626,145,878 Warrants B, 250,367,513 Warrants C and 240,824,301 Warrants D are exercised prior to the implementation of the Proposed Private Placement, a total of up to 435,155,910 new Vivocom Shares ("Placement Share(s)"), representing 10% of the enlarged number of issued shares of Vivocom may be issued pursuant to the Proposed Private Placement. The actual number of Placement Shares to be issued pursuant to the Proposed Private Placement will depend on the total number of issued shares of the Company on a date to be determined and announced later, after receipt of all relevant approvals for the Proposed Private Placement. 1
For illustrative purposes, throughout this announcement, the effects of the Proposed Private Placement shall be illustrated based on the following 2 scenarios:- Minimum Scenario : Assuming none of the outstanding Warrants B, Warrants C and Warrants D are exercised prior to the implementation of the Proposed Private Placement. Maximum Scenario : Assuming all of the outstanding Warrants B, Warrants C and Warrants D are exercised prior to the implementation of the Proposed Rights Issue with Warrants. 2.2 Basis of determining the issue price of the Placement Shares The issue price of the Placement Shares will be determined and fixed by the Board at a later date after receipt of all relevant approvals for the Proposed Private Placement. The Placement Shares will be issued at a price of not more than 10% discount to the 5-day volume weighted average market price ("VWAMP") of Vivocom Shares immediately preceding the price-fixing date. For illustrative purposes only, the indicative issue price of the Placement Shares is assumed at RM0.11 per Placement Share, which represents a discount of approximately 9.32% to the 5-day VWAMP of Vivocom Shares up to and including the LPD of RM0.1213 per Vivocom Share. 2.3 Ranking of the Placement Shares The Placement Shares will, upon allotment and issuance, rank pari passu in all respects with the then existing Vivocom Shares, save and except that the Placement Shares will not be entitled to any dividends, rights, allotments and/ or any other forms of distribution that may be declared, made or paid for which the entitlement date precedes the date of allotment and issuance of the Placement Shares. 2.4 Listing of and quotation for the Placement Shares An application will be made to Bursa Malaysia Securities Berhad ("Bursa Securities") for the listing of and quotation for the Placement Shares on the Main Market of Bursa Securities. 2.5 Allocation to placees The Placement Shares will be placed out to third party investors to be identified at a later stage, where such investor(s) shall be person(s) who/ which qualify under Schedules 6 and 7 of the Capital Markets and Services Act, 2007. RHBIB will be appointed as the placement agent for the Proposed Private Placement after the receipt of all requisite approvals for the Proposed Private Placement. In accordance with Paragraph 6.05(c) of the Ace Market Listing Requirements of Bursa Securities, the Placement Shares will not be placed out to the following parties:- i. The director, major shareholder, chief executive of Vivocom or a holding company of Vivocom, or a person connected with the director, the major shareholder or the chief executive; and ii. Nominee corporations, unless the names of the ultimate beneficiaries are disclosed. 2
In any event that the Board is unable to identify sufficient placees to subscribe for the entire portion of the Placement Shares at one time, the Proposed Private Placement may be implemented in tranches within 6 months from the date of approval of Bursa Securities for the Proposed Private Placement or any extended period as may be approved by Bursa Securities, subject always to the expiry of the General Mandate obtained on 8 June 2017 or a new mandate being obtained from the shareholders of the Company, as the case may be. 2.6 Utilisation of proceeds Based on the indicative issue price of RM0.11 per Placement Share, the Proposed Private Placement is expected to raise gross proceeds under the Minimum Scenario and Maximum Scenario of up to approximately RM35.58 million and RM47.87 million, respectively. The proceeds are intended to be utilised by Vivocom and its subsidiary companies ("Vivocom Group" or the "Group") in the manner set out below:- Details of utilisation Timeframe for utilisation <-----Amount of proceeds-----> Minimum Maximum Scenario Scenario Repayment of borrowings Within 24 months 10,000 10,000 General working capital *2 Within 24 months 25,276 37,567 Estimated expenses in relation to the Proposed Private Placement *3 Upon completion 300 300 Total 35,576 47,867 Notes:- As at the LPD, the total borrowings of Vivocom Group (comprising bankers' acceptance, bank overdrafts, revolving credits, hire purchase payables and term loans) was RM38.73 million. The proceeds for repayment of borrowings will be utilised as set out below:- Type of facility Revolving credit Effective interest rate of facility Amount outstanding as at the LPD Proposed utilisation of proceeds Estimated yearly interest cost savings arising from the repayment Minimum Maximum Minimum Maximum Scenario Scenario Scenario Scenario % 7.40 25,900 10,000 10,000 740 740 *2 The proceeds for general working capital will be used to finance the day-to-day operations of Vivocom Group and are estimated to be utilised as set out below:- Minimum Scenario Maximum Scenario Procurement of raw materials (e.g. cement, tiles, steel bars and other construction related materials Other operating expenses (e.g. utilities, administrative overheads, payment to subcontractor for construction) 20,000 30,000 5,276 7,567 Total 25,276 37,567 3
*3 The proceeds earmarked for estimated expenses in relation to the Proposed Private Placement will be utilised as set out below:- Professional fees (i.e. adviser and placement agent) and placement fees 130 Regulatory fees 20 Other incidental expenses in relation to the Proposed Private Placement 150 Total 300 Any variation in the actual amount of the expenses will be adjusted in the portion of the proceeds to be utilised for the general working capital. The actual gross proceeds to be raised from the Proposed Private Placement is dependent on the issue price and the number of Placement Shares to be issued. Any variance in the actual gross proceeds raised and the intended gross proceeds to be raised will be adjusted against the amount allocated for general working capital of the Group. Pending the utilisation of proceeds from the Proposed Private Placement for the above purposes, the proceeds would be placed as deposits with financial institutions or short-term money market instruments. 3. RATIONALE AND JUSTIFICATIONS FOR THE PROPOSED PRIVATE PLACEMENT After due consideration of the various methods of fund raising, the Board is of the view that the Proposed Private Placement is the most appropriate avenue of fund raising as the Proposed Private Placement:- i. Enables the Company to raise additional funds without incurring interest costs as compared to conventional borrowings; ii. iii. Provides the Company an expeditious way of raising funds from the capital market as opposed to other forms of fund raising; and Increase the size and strength of the Company's shareholders' funds. 4. EFFECTS OF THE PROPOSED PRIVATE PLACEMENT Based on the assumption that the number of Placement Shares issued amounts up to 10% of the total number of issued shares and purely for illustrative purposes only, the effects of the Proposed Private Placement are set out below:- 4.1 Issued share capital The pro forma effects of the Proposed Private Placement on the issued share capital of Vivocom are set out as follows:- 4
Minimum Scenario Maximum Scenario Shares RM Shares RM Issued share capital as at the LPD Assuming full exercise of the outstanding Warrants B, Warrants C and Warrants D 3,234,221,413 323,422,141 3,234,221,413 323,422,141 - - 1,117,337,692 174,348,357 3,234,221,413 323,422,141 4,351,559,105 497,770,498 Shares to be issued pursuant to the Proposed Private Placement 323,422,141 35,576,436 435,155,910 47,867,150 Enlarged issued share capital 3,557,643,554 358,998,577 4,786,715,015 545,637,648 4.2 Net asset ("NA") per Share and gearing Based on the latest audited consolidated statements of financial position of Vivocom Group as at 31 December 2016, the pro forma effects of the Proposed Private Placement on the NA per Share and gearing of the Group are set out below:- Minimum Scenario Audited as at 31 December 2016 Pro forma I After the Proposed Private Placement Share capital 323,422 358,999 Share premium 17,003 16,703 *2 Warrant reserve 4,797 4,797 Exchange reserve 8 8 Retained earnings 88,178 88,178 Shareholders' fund/ NA 433,408 468,685 Non-controlling interests 19,120 19,120 Total equity 452,528 487,805 Shares in issue ('000) 3,234,221 3,557,644 NA per Share (RM) 0.13 0.13 Total borrowings ('000) 37,942 27,942 *3 Gearing ratio (times) 0.08 0.06 Notes:- Assuming 323,422,141 Placement Shares to be issued at an indicative price of RM0.11 *2 After deducting estimated expense of RM300,000 in relation to the Proposed Private Placement *3 After adjusting for the utilisation of proceeds arising from the Proposed Private Placement amounting to RM10.00 million which is earmarked for the repayment of borrowings 5
Maximum Scenario Pro forma I Pro forma II Assuming full Audited as at 31 December 2016 exercise of the Warrants B, Warrants C and Warrants D After the Proposed Private Placement Share capital 323,422 497,770 545,638 *2 Share premium 17,003 21,800 21,500 *3 Warrant reserve 4,797 - - Exchange reserve 8 8 8 Retained earnings 88,178 88,178 88,178 Shareholders' fund/ NA 433,408 607,756 655,324 Non-controlling interests 19,120 19,120 19,120 Total equity 452,528 626,876 674,444 Shares in issue ('000) 3,234,221 4,351,559 4,786,715 NA per Share (RM) 0.13 0.14 0.14 Total borrowings ('000) 37,942 37,942 27,942 *4 Gearing ratio (times) 0.08 0.06 0.04 Notes:- After adjusting for the following:- (i) (ii) (iii) (iv) all the outstanding 626,145,878 Warrants B have been exercised at the exercise price of RM0.20; all the outstanding 250,367,513 Warrants C have been exercised at the exercise price of RM0.10; all the outstanding 240,824,301 Warrants D have been exercised at the exercise price of RM0.10; and reversal of RM4.80 million from the warrants reserve to share premium pursuant to the exercise of all the outstanding Warrants B, Warrants C and Warrants D For illustrative effects only assuming the full exercise of Warrants B, Warrants C and Warrants D was effected on 31 December 2016. The share premium have become part of the Company s share capital pursuant to section 618(2) of the Companies Act 2016 *2 Assuming 435,155,910 Placement Shares to be issued at an indicative price of RM0.11 *3 After deducting estimated expense of RM300,000 in relation to the Proposed Private Placement *4 After adjusting for the utilisation of proceeds arising from the Proposed Private Placement amounting to RM10.00 million which is earmarked for the repayment of borrowings 4.3 Earnings and earnings per Share ("EPS") Save for the possible interest cost savings as disclosed in Section 2.6 of this announcement, the Proposed Private Placement is not expected to have any material effect on the earnings of Vivocom Group for the financial year ending 31 December 2017. However, as the Proposed Private Placement is expected to be completed in the third quarter of 2017, there will be a reduction in the EPS of Vivocom Group for the financial year ending 31 December 2017 due to the increase in the number of Vivocom Shares arising from the Proposed Private Placement. 6
4.4 Substantial shareholding structure The pro forma effects of the Proposed Private Placement on the substantial shareholders' shareholdings of the Company as at the LPD are set out below:- Minimum Scenario Pro forma I Shareholdings as at the LPD After the Proposed Private Placement <--------Direct Interest----------> <--------Deemed Interest-------> <---------Direct Interest---------> <--------Deemed Interest-------> Substantial shareholders Shares % Shares % Shares % Shares % Golden Oasis Resources Sdn Bhd 757,301,608 23.42 - - 757,301,608 21.29 - - Ang Li-Hann 340,940,161 10.54 - - 340,940,161 9.58 - - Note:- The pro forma effects of the Proposed Private Placement on the substantial shareholding structure of the Company is based on the assumption that the Proposed Private Placement does not give rise to the emergence of any new substantial shareholder(s) in the Company THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK 7
Maximum Scenario Substantial shareholders Pro forma I Pro forma II Shareholdings as at the LPD Assuming full exercise of the outstanding Warrants B, Warrants C and Warrants D After I and the Proposed Private Placement *2 <--------Direct----------> <----------Indirect-------> <--------Direct--------> <----------Indirect-----> <--------Direct----------> <----------Indirect-----> Shares % Shares % Shares % Shares % Shares % Shares % Golden Resources Bhd Oasis Sdn 757,301,608 23.42 - - 757,301,608 17.40 - - 757,301,608 15.82 - - Ang Li-Hann 340,940,161 10.54 - - 378,822,702 8.71 - - 378,822,702 7.91 - - Notes:- The warrant holdings of the substantial shareholders as at the LPD is set out below:- Warrants B Warrants C Warrants D Direct Indirect Direct Indirect Direct Indirect Golden Oasis Resources Sdn Bhd - - - - - - Ang Li-Hann - - - - 37,882,541 - *2 The pro forma effects of the Proposed Private Placement on the substantial shareholding structure of the Company is based on the assumption that the Proposed Private Placement does not give rise to the emergence of any new substantial shareholder(s) in the Company 8
4.5 Convertible securities Save for the outstanding 626,145,878 Warrants B, 250,367,513 Warrants C and 240,824,301 Warrants D, the Company does not have any other existing convertible securities as at the LPD. The Proposed Private Placement will not result in any adjustment to the exercise price and the number of existing Warrants B, Warrants C and Warrants D of the Company. 5. APPROVALS REQUIRED The Proposed Private Placement is subject to the following approvals being obtained:- i. Bursa Securities, for the listing of and quotation for the Placement Shares on the Ace Market of Bursa Securities; and ii. Any other relevant authority, if required. The Proposed Private Placement is not conditional upon any other proposals undertaken or to be undertaken by the Company. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/ OR PERSONS CONNECTED TO THEM None of the Directors and/ or major shareholders of Vivocom and/ or persons connected to them have any interest, whether direct or indirect, in the Proposed Private Placement. 7. DIRECTORS' STATEMENT The Board, having considered all aspects of the Proposed Private Placement, is of the opinion that the Proposed Private Placement is in the best interest of the Company. 8. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all required approvals being obtained, the Proposed Private Placement is expected to be completed by the third quarter of 2017. 9. APPLICATION TO THE AUTHORITIES The application to the relevant authorities shall be made within 1 month from the date of this announcement. 10. ADVISER RHBIB has been appointed as the Adviser for the Proposed Private Placement. This announcement is dated 29 June 2017. 9