ASIA MEDIA GROUP BERHAD ( AMEDIA OR THE COMPANY OR THE VENDOR ) PROPOSED DISPOSAL OF THE ENTIRE EQUITY INTEREST IN DPO PLANTATIONS SDN BHD ( DPO ), A WHOLLY-OWNED SUBSIDIARY OF AMEDIA, TO DPO HOLDINGS PTE LTD ( DPOHPL OR PURCHASER ) FOR A CASH CONSIDERATION OF RM4,000,000 ( PROPOSED DISPOSAL ) 1. INTRODUCTION The Board of Directors of AMEDIA ( Board ) wishes to announce the Proposed Disposal. Further details of the Proposed Disposal are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED DISPOSAL On 22 December 2017, AMEDIA entered into a share sale agreement ( SSA ) to sell its entire equity interest in DPO comprising 5,000,000 ordinary shares ( DPO Shares ) ( Sale Shares ) for a cash consideration of RM4,000,000 ( Disposal Consideration ) to DPOHPL. The Sale Shares shall be disposed of free from all liens, charges, encumbrances and claims from any third party of any nature whatsoever and with all rights, dividends, interest, bonus, accretions and accruals attaching thereto, with effect from the completion date of the SSA ( Completion Date ). Upon completion of the SSA, DPO will cease to be a wholly-owned subsidiary of AMEDIA. 2.1 Background information On 20 January 2015, AMEDIA acquired 2 ordinary shares of RM1 each representing 100% equity interest in DPO, for a cash consideration of RM2.00. With the acquisition of DPO, AMEDIA proposed to diversify its existing business to include oil palm plantation business ( Diversification ). Subsequently, AMEDIA obtained its shareholders approval for the Diversification at its extraordinary general meetings held on 24 August 2015. On 2 February 2016, DPO entered into a joint venture agreement ( JVA ) with Pelita Holdings Sdn Bhd ( PHSB ) for the development of an oil palm plantation on a native customary rights land situated at Loba Bunut Hulu, Bintangor, Sarawak ( NCR Land ) containing an area of approximately 1,921 hectares via a joint venture company, DPO Pelita Bintangor Sdn Bhd ( DPBSB or JV Company ) which was incorporated on 4 March 2016. DPO has spent approximately RM4.7 million up to 30 September 2017 for site clearing, site preparation, infrastructure, motor vehicle and machinery from AMEDIA s total investment of RM5.0 million. 2.2 Information on DPO DPO was incorporated in Malaysia on 24 January 2005 and is principally engaged in the cultivation of oil palm. As at 21 December 2017 (being the latest practicable date prior to this announcement ( LPD )), DPO has an issued share capital of RM5,000,000 comprising 5,000,000 DPO Shares. The directors of DPO as at the LPD are Dato s Wong Shee Kai and Teh Sew Wan. 1
DPO is a wholly-owned subsidiary of AMEDIA. As at the LPD, DPO has the following subsidiary: Name Date and place of incorporation Issued share capital Equity interest held (%) Principal activity DPBSB 4 March 2016, Malaysia RM100 60 (1) Dormant (2) Notes: (1) The remaining 40% equity interest in DPBSB is owned by PHSB (of which 30% is held in trust for the native customary rights land s owners). (2) Its intended principal activity is cultivation of oil palm. Based on the financial statements of DPO for 9-month period ended 31 September 2017, DPO had net assets of RM4.01 million as at 31 September 2017 and loss after tax of RM0.48 million for 9-month period ended 31 September 2017. DPO has not generated any revenue up to the LPD. 2.3 Basis of and justification in arriving at the Disposal Consideration The Disposal Consideration was arrived at on a willing-buyer willing-seller basis after taking into consideration of the net asset of DPO as at 31 September 2017 of RM4.01 and the rationale as set out in Section 5 of this announcement, respectively. 2.4 Original cost and date of investment AMEDIA s original cost and date of investment in DPO are as follows: Date Cost of investment No. of DPO Shares (RM) 24 January 2015 2 2 6 October 2015 4,999,998 4,999,998 Total 5,000,000 5,000,000 2.5 Liabilities to be assumed by the Purchaser The Purchaser will not be assuming any liabilities (including contingent liabilities or guarantees) pursuant to the Proposed Disposal, except for the liabilities arising from the ordinary course of business of DPO and its subsidiary. 3. SALIENT TERMS OF SSA 3.1 Agreement for sale Subject to the terms and conditions of the SSA, the Vendor shall sell as beneficial and/or registered owner and/or is authorised and/or is empowered to and the Purchaser shall purchase the Sale Shares, free from all liens, charges, encumbrances and claims from any third party of any nature whatsoever and with all rights, dividends, interest, bonus, accretions and accruals attaching thereto, with effect from the Completion Date. 3.2 Consideration The Disposal Consideration shall be paid by the Purchaser to the Vendor in the following manner: (a) On execution of the SSA, the Purchaser shall pay a sum equivalent of the deposit of RM400,000 to the Vendor; and 2
(b) On or before expiry of a period of 4 months from the date of the SSA or such extended period as may be mutually agreed between the Purchaser and the Vendor ( Completion Period ), the Purchaser shall pay a sum equivalent to the balance Disposal Consideration of RM3,600,000 to the Vendor. 3.3 Approvals The following approvals are to be being fulfilled or complied with, as the case may be, within the Completion Period, namely: (a) (b) (c) the approval of PHSB pursuant to the terms of the JVA for the sale and purchase of the Sale Shares to the Purchaser under the SSA; the approval of the shareholder of the Purchaser for the sale and purchase of the Sale Shares, if so required; and the approval or consent from any relevant authorities or authorities is/are obtained by the Vendor on behalf of DPO, arising from the change in shareholdings of DPO, if so required. 3.4 Completion 3.4.1 Completion shall take place on a business day at the office of the Vendor (or at such other place as the Vendor and the Purchaser may agree in writing) on the Completion Date. 3.4.2 On Completion Date, the Vendor shall deliver to the Purchaser the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) the valid, undated and unstamped share transfer form or forms in respect of the Sale Shares duly executed by the Vendor to vest title, interest and rights to the Sale Shares in the Purchaser and/or its nominee(s) as the registered and/or beneficial owners thereof duly executed by the Vendor in favour of the Purchaser; the share certificates for the Sale Shares; undated resolution of the board of directors of DPO in respect of the registration of the transfer of the Sale Shares in favour of the Purchaser in DPO s register of members and the issuance of new share certificates in respect of the Sale Shares in favour of the Purchaser; undated letter of resignation of the directors of DPO and of the JV Company who are the nominees of the Vendor, to be effective on Completion; undated resolution of DPO and of the JV Company appointing the nominee of the Purchaser as directors of DPO and of the JV Company; the duly signed and undated letter of resignation of the company secretary of DPO and of the JV Company to be effective only upon Completion; the statutory and minute books of DPO and of the JV Company, complete and up-to-date as at the Completion Date, and its certificate of incorporation, common seal, all financial and accounting records, of DPO and of the JV Company, cheque books and bank mandates (if any); the original JVA and all files and correspondences in connection with the JVA; the duly signed and undated resolutions of the board of directors of DPO and of the JV Company to be dated as at the Completion Date appointing such persons as shall be nominated by the Purchaser as the persons authorised to operate DPO s and JV Company s bank accounts, and revoking any and all such previous appointments and/or authorisations; and 3
(j) letter from DPO confirming the advances made by the Vendor to DPO up to Completion Date, which as at the date of the SSA, is RM 400,000. 3.4.3 Against delivery of the documents in the SSA on or prior to Completion Date, the Purchaser shall pay the balance Disposal Consideration to the Vendor. 3.4.4 The Purchaser shall indemnify the Vendor and the directors who are the nominee of the Vendor and the company secretary of the Company for any loss, fines, claims or damages suffered after Completion Date due or attributable to the Purchaser or the Purchaser s nominees. 3.5 Breach of warranties before completion If any breach of the warranties or undertakings set out in the SSA shall come to the notice of the Purchaser before Completion or if any act or event shall occur which, had it occurred on or before the date of the SSA, would have constituted a breach of any of the said warranties or undertakings or if there is any material breach or non-fulfilment before completion of any of the obligations on the part of the Vendor contained in the SSA which (being capable of remedy is not remedied prior to Completion) then (in addition and without prejudice to any rights or remedies available to the Purchaser in respect thereof), the Purchaser shall be at liberty without any liability whatever to the Vendor to elect not to complete the purchase of the Sale Shares by giving notice to that effect to the Vendor within 30 days of the Purchaser becoming aware of the same and upon the Purchaser electing not to complete the purchase in the SSA, the transactions consequent upon a termination under the SSA applies. 3.6 Post completion obligations and rights of the parties 3.6.1 The Purchaser acknowledges that the Vendor has made and may make advances to DPO from time to time ( Advances ) to enable DPO to advance to the JV Company such monies necessary to enable DPO to discharge its obligations under the JVA. The Purchaser shall procure DPO to repay the Advances to the Vendor within one year from the Completion Date. 4. INFORMATION ON THE PURCHASER DPO Holdings Pte Ltd ( DPOHPL ) was incorporated in Singapore on 27 January 2017 and is wholly-owned by Style City Limited ( SCL ), which was incorporated in British Virgin Islands on 10 October 2017. The directors of DPOHPL are Lye Jun Fei, Ang Kian Chuan and Warinat Lim. The directors and shareholders of SCL are Lye Jun Fei and Ang Kian Chuan. 5. RATIONALE FOR THE PROPOSED DISPOSAL The development of the NCR Land requires substantial funding. As the Company and its subsidiaries ( Group ) are unable to raise sufficient funds via equity or bank borrowings for this purpose, the Group has decided to dispose of DPO in order to avoid further losses in the future. Moving forward, the Group will continue to focus on its existing business comprising multimedia advertising services, media communications, commercialisation of narrowcasting network solutions (i.e. display of contents on a digital signage network) and dynamic and automation contents (i.e. a moving and automatic way of reloading contents) and support services relating to the above products. In addition, the Disposal Consideration can be utilised by the Group for the purposes set out in Section 6 of this announcement. 4
6. UTILISATION OF PROCEEDS AMEDIA intends to utilise the Disposal Consideration of RM4,000,000 in the following manner: Intended purposes Notes RM Expected time frame for the utilisation (from the Completion Date) Working Capital (1) 3,950,000 Within 12 months Expenses in relation to the Proposed Disposal (2) 50,000 Within 2 weeks Total 4,000,000 Notes: (1) To finance the Group s day-to-day operations which include payment to creditors and operating expenses such as payment of salaries and general expenses. (2) Comprising professional fees and incidental expenses in relation to the Proposed Disposal. Any actual surplus or shortfall of the allocated amount will be adjusted against the allocation for working capital of the Group. 7. RISK FACTORS 7.1 Non-completion of the SSA In the event any of the terms and conditions of the SSA is not fulfilled or waived (as the case may be), the Proposed Disposal may be delayed or terminated. This may result in the potential benefits arising from the Proposal Disposal failing to materialise, including the proceeds from the Disposal Consideration. The Board is taking all necessary steps to satisfy these terms and conditions in order for the Proposed Disposal to be completed successfully. 7.2 Loss of potential future income contribution from DPO DPO will cease to be a subsidiary of the Company after the Proposed Disposal and the Company will no longer be able to consolidate the financial results of DPO in future. The management of the Group is of the view that the Proposed Disposal will not result in any material adverse impact on the Group s overall financial performance, going forward. 8. EFFECTS OF THE PROPOSED DISPOSAL 8.1 Share capital and substantial shareholders shareholdings The Proposed Disposal will not have any effect on the Company s share capital and substantial shareholders shareholdings in the Company. The Disposal Consideration will be satisfied entirely by cash without any issuance of new ordinary shares in AMEDIA ( AMEDIA Shares ) or convertible securities. [The rest of this page has been intentionally left blank] 5
8.2 Net assets attributable to owners of AMEDIA ( NA ) and gearing The Proposed Disposal has the following pro forma effects on the NA, NA per AMEDIA Share and gearing of the AMEDIA Group based on its audited consolidated financial statements as at 31 December 2016: (Audited) (I) Group As at 31 December 2016 After the Proposed Disposal (RM 000) (RM 000) Share capital 23,946 23,946 Share premium 827 827 Warrant reserves 3,520 3,520 Accumulated losses (5,386) (5,256)* Shareholders funds / NA 22,907 23,037 No. of AMEDIA Shares in issue 239,463,426 239,463,426 NA per AMEDIA Share (RM) 0.10 0.10 Total borrowings (RM 000) 1,500 1,500 Gearing (times) 0.07 0.07 Note: * After taking into consideration the gain on disposal of RM0.34 million and estimated expenses of approximately RM50,000 in relation to the Proposed Disposal. 8.3 Earnings and earnings per share From the Proposed Disposal, the Group is expected to realise a net gain attributable to owners of the Company of approximately RM 0.29 million. 9. HIGHEST PERCENTAGE RATIO The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is 21.83% calculated based on the AMEDIA s original cost of investment in DPO of RM5.00 million compared against the Group s latest audited NA as at 31 December 2016 of RM22.91 million. 10. APPROVALS REQUIRED As the highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of the Listing Requirements does not exceed 25%, the Proposed Disposal does not require the approval of the Company s shareholders or any other regulatory body. 11. INTER-CONDITIONALITY OF THE PROPOSED DISPOSAL The Proposed Disposal is not conditional upon any other corporate proposals of the Company. 12. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM None of the directors and major shareholders of the Company or persons connected with them has any interest, whether direct or indirect, in the Proposed Disposal. 6
13. DIRECTORS STATEMENT After having considered all aspects of the Proposed Disposal, the Board is of the opinion that the Proposed Disposal is in the best interests of the Company. 14. ESTIMATED TIMEFRAME FOR COMPLETION The Board expects the Proposed Disposal to be completed by the end of 1 st quarter of 2018. 15. DOCUMENT FOR INSPECTION A copy of the SSA is available for inspection during normal business hours from 9.00 a.m. to 5.30 p.m. from Monday to Friday (excluding public holidays) at the Registered Office of AMEDIA located at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, for a period of 3 months from the date of this announcement. This announcement is dated 22 December 2017. 7