General Announcement
Reference No
O&-050922-64222
Submitting Merchant Bank
:
K & N KENANGA BHD
Company Name
:
ASIAEP BHD
(MESDAQ Market)
Stock Name
:
ASIAEP
Date Announced
:
22/09/2005
Type
:
Announcement
Subject
:
ASIAEP BERHAD ("AsiaEP" or the "Company")
Proposed acquisition of the entire issued and paid-up share capital of Conversant Solutions Pte Ltd
Contents :
K&N Kenanga Bhd (
"Kenanga"
), on behalf of the Board of Directors of AsiaEP (the
"Directors"
), is pleased to announce that the Company had on 22 September 2005 accepted an offer from Mr Cheong Kong Wai (the
"Vendor"
)
for AsiaEP
to acquire the entire issued and paid-up share capital of Conversant Solutions Pte Ltd (
"Conversant"
) (to be described hereon as the
"Proposed Acquisition"
) via a letter of offer dated 15 September 2005 (the
"Letter of Offer"
). The current issued and paid-up share capital of Conversant is SGD10.01 comprising 1,001 ordinary shares of SGD0.01 each (
"Sale Shares"
).
Under the Letter of Offer, the Vendor has also provided an irrevocable guarantee of an aggregate profit after tax attributable to shareholders (
"PAT"
) over three financial years in respect of Conversant amounting to RM5.7 million (
"Profit Guarantee"
). The Profit Guarantee is segregated in the following manner:-
(i) For the financial period ending 31 December 2005, an amount of RM1.5 million (
"Year 1 Profit Guarantee"
);
(ii) For the financial period ending 31 December 2006, an amount of RM1.9 million (
"Year 2 Profit Guarantee"
); and
(iii) For the financial period ending 31 December 2007, an amount of RM2.3 million (
"Year 3 Profit Guarantee"
).
The Company shall acquire the Sale Shares for an aggregate purchase consideration of RM9,900,000 (the
"Purchase Consideration"
) to be satisfied by a total cash consideration of RM4,950,000 (
"Cash Consideration"
) and the issue and allotment of 18,333,334 new AsiaEP ordinary shares of RM0.10 each at an issue price of RM0.27 each (the
"Consideration Shares"
). The settlement of the Purchase Consideration shall be made upon Conversant meeting the Profit Guarantee in the following manner (the
"Settlement"
):-
(i)
RM3,300,000 upon meeting at least the Year 1 Profit Guarantee consisting of RM1,650,000 Cash Consideration and 6,111,111 Consideration Shares;
(ii)
RM3,300,000 upon meeting at least the Year 2 Profit Guarantee consisting of RM1,650,000 Cash Consideration and 6,111,111 Consideration Shares; and
(iii)
RM3,300,000 upon meeting at least the Year 3 Profit Guarantee consisting of RM1,650,000 Cash Consideration and 6,111,112 Consideration Shares.
In the event the Vendor meets above 75% and up to 100% of the Profit Guarantee for the respective financial years, the Settlement amount payable by the Company for the respective Profit Guarantee period shall be reduced accordingly. Consequently, in the event that the Vendor meets 75% and below the Profit Guarantee for the respective financial years, the Company will not be obliged to pay any Settlement amount for that respective Profit Guarantee period.
Conversant was incorporated in Singapore in 2002 and is principally involved in the provision of portal based software services to Small and Medium-sized Enterprises (
"SMEs"
) and end-customers through formal channel partners. Conversant's current service offerings include providing hosted messaging, online storage and calendaring portal services to SMEs in partnership with SingNet Pte Ltd (
"SingNet"
). In addition, Conversant also provides hosted email anti-virus and anti-spam solutions to both SMEs and end-customers in partnership with Singapore Telecommunications Ltd (
"SingTel"
). Currently it has more than 2,000 SME customers and 180,000 end-users under its stable. The Directors are of the view that the Proposed Acquisition is a complementary acquisition as Conversant is involved in a similar business as AsiaEP, with similar SME type customers which will provide a wider and immediate customer-base for AsiaEP in Singapore. Further the Proposed Acquisition will also provide the Company with an opportunity to expand its reach into a new foreign market and expand its service offerings of eMarketplace to also include portal hosted messaging, online storage, calendaring, email anti-virus and anti-spam. SingNet and SingTel are part of the Singapore Telecommunications Ltd Group, which is a Singapore-based communications group. The Proposed Acquisition provides Conversant with an opportunity to be part of AsiaEP's vision to be a leading global eMarketplace and online service provider.
In addition to the above, the terms of the Letter of Offer also stipulate that the Vendor will on "best efforts" basis expand the market of Conversant's current business to include the Philippines and Thailand within 12 to 15 months from the completion of the Proposed Acquisition.
The terms of the Letter of Offer are only preliminary in nature and are subject to the execution of a formal conditional sale and purchase agreement between the Vendor and AsiaEP within 30 days (or such later date to be mutually agreed upon in writing) (
"Acquisition Agreement"
) after the acceptance of the Letter of Offer by AsiaEP. The Acquisition Agreement will set out in detail all the terms and conditions which will govern the Proposed Acquisition.
A full announcement of the terms and conditions of the Proposed Acquisition including all other relevant information will be made upon execution of the Acquisition Agreement. In the event that the Acquisition Agreement is not entered into within the stipulated timeframe, the Letter of Offer shall terminate and be of no further effect and all parties shall be released from all further obligations to each other.
The Directors and substantial shareholders of the Company do not have any interest, directly or indirectly, in the Proposed Acquisition. Insofar as the existing Directors and the substantial shareholders are able to ascertain and are aware, no persons connected to them have any interest, directly or indirectly, in the Proposed Acquisition.
This announcement is dated 22 September 2005.