General Announcement
Reference No CA-120126-53597
Company Name
:
THE MEDIA SHOPPE BERHAD(ACE Market)
Stock Name
:
TMS
Date Announced
:
26/01/2012
Type
:
Reply to query
Reply to Bursa Malaysia's Query Letter - Reference ID
:
NM-120120-34180
Subject
:
i) Heads of Agreement between The Media Shoppe Berhad ("TMS") and Viewnet Computer System Sdn Bhd;
ii) Heads of Agreement between TMS and Open Adventure Sdn Bhd; and
iii) Teaming Agreement between Konsortium Jaya Sdn Bhd and TMS Software Sdn Bhd
Description
:
Bursa Malaysia Securities Berhad's letter dated 20 January 2012 querying the Company on the subject matters.
Query Letter
content
:
We refer to your announcements dated 19 January 2012 in respect of the above
captioned matters.
In this connection, kindly furnish Bursa Securities with the following
additional information for public release :-
Heads of Agreement with Viewnet Computer System Sdn Bhd ("Viewnet") and Open
Adventure Sdn Bhd respectively ("OASB") ("Heads of Agreements"):
1) Salient features of the Heads of Agreements with Viewnet and OASB
respectively, and the time and place where they may be inspected.
2) The audited financial information (past 3 years or since incorporation,
whichever is the later) and the latest interim results, if available, of
Viewnet and OASB respectively stating turnover, profit before tax and profit
after tax and minority interest.
3) Further details of Viewnet and OASB, including their principal businesses.
4) To provide details on the expected financial effects of the proposed
acquisitions of Viewnet and OASB.
5) To provide details of the expected financing requirements and/or sources of
funding for the proposed acquisitions of Viewnet and OASB.
6) To provide details of the timing and status of the due diligence including
whether any professional advisers have been or will be appointed.
Page 1 of 3
The Media Shoppe Berhad
Heads of Agreements and Teaming Agreement
Page 2 of 3
7) To provide details of the vendors of Viewnet and OASB.
The equity interest in Viewnet and OASB to be acquired.
9) To provide details whether any deposit have been paid in relation to the
Heads of Agreements and the key terms and conditions of the deposits paid.
10) Whether the Heads of Agreements are binding and the relevant termination
clauses or conditions precedent.
Teaming Agreement between Konsortium Jaya Sdn Bhd ("KJSB") and TMS Software
Sdn Bhd ("TMSS") ("Teaming Agreement"):
1) Details of KJSB., including the following:
a) date and place of incorporation,
b) principal business,
c) names of directors and their respective shareholdings therein, and
d) names of shareholders, and their respective shareholdings therein.
2) Expected date of submission of the proposal to the Government of
Malaysia, represented by the Ministry of Education ("Customer") in relation to
the "Perluasan Sistem Pengurusan Sekolah" to all 10,000 schools nationwide
("Project").
3) The expected date on which the outcome of the submission of the proposal to
the Customer will be made known to KJSB/TMSS.
4) Duration of the Project.
5) A description of TMSS and KJSB's respective responsibilities as described
in the Teaming Agreement.
6) The effect of the Project on the TMS group, which includes the effect of
the Project on the earnings per share, net assets per share, gearing, share
capital and substantial shareholders’ shareholding of TMS.
7) The risks in relation to the Project.
Whether any deposit has been paid in relation to the Teaming Agreement,
including but not limited to the Company's portion of any performance bond,
tender fee, etc.
9) To provide details of the expected financing requirements and/or sources of
funding for the Teaming Agreement and/or subcontract agreement.
10) Estimated valueof the Project, including details of the profit/revenue
sharing arrangement between the Company and KJSB, including the profit margin
etc (if any).
11) To provide details as to the Company's capability, experience and resources
in undertaking the Project.
The Media Shoppe Berhad
Heads of Agreements and Teaming Agreement
Page 3 of 3
12) To provide details whether the Teaming Agreement is binding on the parties.
Kindly furnish Bursa Securities with your reply within one (1) market day from
the date hereof.
Yours faithfully
TAN YEW ENG
Head, Issuers
Listing Division
Regulation
TYE/NMA
c.c:- Head, Market Surveillance Department, Market Supervision Division,
Securities Commission (via
fax)
Announcement Details/Table Section :
We refer to your letter dated 20 January 2012 to our Company Secretary in respect of the above subject matters. Unless otherwise stated, any abbreviation herein shall follow that as set out in your letter.
Heads of Agreement with Viewnet and OASB:
1) The salient features of the undated Heads of Agreements which have been duly announced on 19 January 2012 are:
a) TMS will conduct its due diligence on Viewnet and OASB;
b) The Parties will aim to enter into definitive agreements (“Agreement”) for TMS to acquire Viewnet (within 9 months) and OASB (within 6 months);
c) In the event it should be found from the due diligence that the representations of the target companies are materially incorrect (deviation of more than 10%), TMS shall have the right to unilaterally terminate the Heads of Agreement and decide not to proceed with the Agreement.
d) The Heads of Agreement will terminate upon the Parties entering into the definitive Agreement.
A copy of the respective Heads of Agreement is available for inspection for a period of 3 months during office hours at the principal place of business of TMS at C-01-3, Block C, Plaza Glomac, 6, Jalan SS7/19, 47301 Petaling Jaya and also at the registered office of the Company at 10th Floor, Menara Hap Seng, No.1&3, Jalan P.Ramlee 50250, Kuala Lumpur.
2) Due diligence has not commenced as at today given the Chinese New Year holidays. We have conducted searches with the Companies Commission of Malaysia (“CCM”) and requested for documents available.
Based on audited accounts of OASB (for approximately 15 months) made up from date of incorporation in 27 January 2010 till 31 March 2011:
Revenue
RM1,140,520.00
Profit Before Tax
RM101,379.00
Profit After Tax
RM85,831.00
Minority Interest
N/A
Viewnet:
Based on audited accounts for Financial Years Ending 31 December
2008
2009
2010
Revenue
RM54,742,778.00
RM68,039,186.00
RM107,910,620.00
Profit Before Tax
RM327,049.00
RM407,490.00
RM3,541,293.00
Profit After Tax
RM253,512.00
RM270,906.00
RM2,536,208.00
Minority Interest
N/A
N/A
N/A
3) As announced on 19 January 2012 and extracted from the respective Heads of Agreement, Viewnet is engaged in the business of trading in software, hardware, multimedia, internet and electronic commerce providers and facilitators whilst OASB is an Information Technology Solutions and related services provider. We are unable to confirm whether these are as per their respective Memorandum of Association since our due diligence has not commenced.
4) We are unable to state the financial effects of the proposed acquisitions on our group as we are still negotiating on the terms of the acquisitions including purchase consideration, mode of satisfaction, sources of funds etc. However, we expect the acquisitions to have a positive financial effect on our group barring unforeseen circumstances.
5) For the proposed acquisitions of the 2 companies, the purchase consideration has yet to be determined and we may use consideration of cash, shares or a combination and may differ between the 2 companies depending on negotiations. The Board will deliberate further only after completion of the due diligence exercise.
6) We have given ourselves time to enter into definitive agreements with the 2 target companies as set out in the Heads of Agreement. Obviously upon signing the Heads of Agreement which allows us to commence our due diligence, we have not commenced our due diligence. Advisers including solicitors and accountants will be appointed to conduct due diligence on the target companies. We expect to be able to commence our due diligence within 2 months from the undated Heads of Agreement and complete the due diligence exercise within 3 months from commencement thereof. TMS intends to date the Heads of Agreement as 19 January 2012.
7) Having not commenced our due diligence, based on information made available to us, the directors of
Viewnet:
Directors: Pang Kim Moon, Ng Pak Yoong
Shareholders:
Pang Kim Moon
40%
Aura Active Sdn. Bhd. (Chong Quek Hin and Lee Yoke Pei)
40%
Ng Pak Yoong
20%
OASB:
Directors: Hep Kim Hong, Chan Chau Loong
Shareholders:
Hep Kim Hoong
34%
Chan Chau Loong
33%
Liaw Yit Sun
33%
In the event TMS does not acquire 100% of either of the target companies, the Vendors will be a combination of the above names depending on outcome of negotiations.
We hope to acquire 100% of both target companies but this is subject to negotiations with the parties respectively and our Board of Directors’ deliberation. The purchase consideration is yet to be determined at this stage.
9) No deposit has been paid or received in respect of either of the Heads of Agreement.
10) The whole of the Heads of Agreement are binding. Termination situations have been outlined above in item (1) under salient features. The binding terms worth highlighting and recourse are as follows:
a) TMS will conduct its due diligence inspection on the respective companies and in the event it should be found that the representations made by each of the target companies are materially incorrect (deviation of more than 10%), TMS will have the recourse of terminating the relevant Head of Agreement.
b) The Heads of Agreement are governed by Malaysian laws and the Parties agree to irrevocably submit to the Malaysian Courts in the event of a dispute.
We would also clarify that the Heads of Agreement were entered into with the respective target companies instead of the respective Vendors since the exact percentage to be acquired has not been determined and we have not entered into actual negotiations with any of the respective shareholders of the target companies for their respective shares. All potential Vendors are keen to be involved in the transaction but since the actual purchase consideration and percentage to be acquired has not been finalized at this stage, TMS feels it is more relevant and prudent to sign the Heads of Agreement with the target companies since all shareholders of the target companies are keen to be part of the TMS Group.
Teaming Agreement between KJSB and TMSS:
1) We are in no position to confirm on KJSB’s corporate information. However, based on a CTOS search, the results made available to us yield as follows:
a) Company No: 0120381-M, Date of Incorporation: 25 May 1984. Place of incorporation: Malaysia
b) Principal business: SALE AND MAINTENANCE OF COMPUTER AND TELECOMMUNICATION, EQUIPMENT,PERIPHERALS AND RELATED SERVICES
c) Names of Directors: i) ADI AZUAN BIN ABDUL GHANI; ii) RICHARD GEORGE AZLAN BIN ABAS
d) Shareholders: THETA EDGE BHD (100%)
2) There is currently no call for tender and the expected date of submission of proposal to the Government for the Project relating to the 10,000 schools is currently not fixed and we are working closely with KJSB to prepare the same. Relevant announcements will be made in due course at the appropriate time in compliance with our Continued Listing Obligations.
3) On the expected date of award, we are not in the position to confirm or provide any indication on behalf of the Government.
4) The Duration of the Project is currently targeted for an implementation period of between 3 to 5 years and is yet to be finalised.
5) The roles of the respective Parties include:
KJSB:
(a) to be the lead party in hosting, creating and submitting the Proposal and subsequently correspondences with the Customer;
(b) to provide necessary technical manpower including but not limited to computer systems analysts;
(c) to consult TMSS on the preparation, creation, submission of Proposal and communication with the Customer;
(d) to include TMSS’s Services in the Proposal;
(e) to promote the Proposal;
(f) to take prime lead to secure the Prime Contract;
(g) in the event of a successful award, irrevocably undertake to appoint TMSS as the sub-contractor for the provision and implementation of the Services.
TMSS:
(a) to assume the role of sub-contractor to KJSB in the Project;
(b) to provide KJSB with all necessary inputs including but not limited to drafting Proposal and report when necessary;
(c) to prepare and submit to KJSB the part of the Proposal that pertains to its Services (“Component Proposal”) for inclusion by KJSB in the Proposal. Component Proposal shall be submitted in the format prescribed by KJSB;
(d) to support KJSB at all times in KJSB’s promotion of the Proposal to the Customer; and
(e) to work closely with KJSB to secure an award of a Prime Contract.
6) As the award and the scope required by the Government has not been issued, we do not have finalised concrete numbers allocated by the Government and as such, it is too early to assess but if all goes to plan, TMS expects the contribution of this Project to have a positive effect on the financials of the TMS Group barring unforeseen circumstances.
7) The only risk ascertainable at this stage (given the actual award and scope is not finalized) is that the Project is dependent on availability of internet connection to schools which is a different project altogether and which we understand has been awarded (1 BestariNet) to a third party. There will be teething issues which we do not classify as risk such as training relevant people on the use of the system and the time taken for teachers to adapt to the system.
No deposit has been paid or received in relation to the Teaming Agreement.
9) The primary source of funding is expected to be the responsibility of the Tabung Haji Group as our partner in this Project and currently, we are expecting it to be in the model of a Private Finance Initiative (PFI). Having said that, since the actual award and scope is not out, we are unable to assess the actual financing requirements at this stage and if required, may be considering a combination of funding from KJSB or Tabung Haji Group, banking facilities, raising capital from the market. Our Board of Directors will deliberate and decide in due course.
10) The value of the Project and profit sharing arrangement with KJSB is yet to be determined at this stage. The proposed value may change based on scope of work which is not determined yet.
11) We have successfully implemented the pilot project for 88 schools and have the technical knowledge, experience, software resources and necessary expertise for the same area.
12) The Teaming Agreement is binding on the Parties. The duration of the Teaming Agreement is for a period of 1 year from the Effective Date and automatically extend for successive 6 month terms provided either Party may upon written notice to the other Party, of not less than 3 months prior to the end of any term, elect to terminate the Teaming Agreement whereupon the said agreement shall cease and be of no further force or effect. The Teaming Agreement may also be terminated immediately on any of the following events:
a) Termination by mutual consent of both Parties;
b) Execution of Subcontract upon award of the Project by the Customer to KJSB;
c) Official announcement by the Customer that the Proposal has been rejected;
d) If either Party commits any breach of its obligations in the Teaming Agreement and fails within 30 days of receipt of written notice by the other Party to remedy such breach, in which case, such termination shall be without prejudice to any other rights and remedies which may have accrued in the Teaming Agreement to the Party not in breach;
e) If either Party goes into liquidation (except for the purposes of amalgamation or reconstruction), or makes an arrangement, compromise, or composition with its creditors, or has a receiver appointed in respect of its assets; or
f) If either Party ceases to do business for any reason.
We trust the above clarifies. 
