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Background |
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e-pay Asia was previously known as SkyNetGlobal Limited
and was in the broadband telecommunications business.
On 17 November 2005, the shareholders of the Company
approved the acquisition of e-pay, the change of name
to e-pay Asia Limited and the nature of its activities
to become an electronic payments business in the Southeast
Asian region. |
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The e-pay acquisition offers an exciting opportunity
to enter a rapidly growing market through a leading
player with a strong track record of profitability.
The Company sees this acquisition as a major step in
the development of the Company, and the Directors consider
that it offers significant value for shareholders. The
Company has undertaken an extensive review of the e-pay
business and considers that the acquisition represents
an excellent opportunity to create substantial value
for shareholders for the following reasons: |
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- The pre-paid mobile Top Up market in Southeast
Asia, where e-pay has a leading market position,
is substantial and growing.
- e-pay has an established record of rapid and
profitable growth, and strong cash flows, and is
well placed to take advantage of the opportunities
offered by the mobile Top Up market
- The enlarged entity, with its size and strong
cash flows, will have better access to funds to
develop the business and will be able to reduce
its cost of capital.
- The acquisition accelerates the return shareholders
should receive from their investment with the Company
presently expecting to distribute 40% of retained
after-tax income by way of unfranked dividend.
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The Directors consider that the consolidated entity
will be well placed to leverage its position as the
dominant electronic prepaid mobile Top Up player in
Southeast Asia to gain additional market share in those
countries and expand to New Markets, namely China, Vietnam,
Singapore and the Philippines. |
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Details of the Acquisition |
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As announced to ASX on 6 September 2005, 12 October
2005 and as further amended on 17 October 2005, the
Company has entered into a conditional share purchase
agreement as amended (“Agreement”) with
Tobikiri Capital Limited, a company incorporated in
the British Virgin Islands (“Vendor”) to
acquire Orion Gateway Limited ("OGL"). OGL’s
sole asset is a 60% controlling stake in e-pay (M) Sdn.
Bhd. (“e-pay”), together with interests
(both direct and indirect) in the other related entities
in the e-pay business namely, a 52.1% interest in PT
e-pay Indonesia, a 30% interest in e-pay Pakistan Private
Ltd, a 29.7% interest in e-pay Thailand Co. Ltd and
an 18% interest in Electronic Payment Network (Thailand)
Co. (References to "e-pay" outside of Malaysia
include references to these entities which also form
the e-pay business). e-pay is Southeast Asia’s
largest regional provider of electronic Top Up airtime
for mobile phone prepaid users. Shareholders of the
Company approved the acquisition at a shareholders meeting
held on 17 November 2005. The shares of the Company
have since been suspended from trading on ASX until
completion of the Acquisition which is conditional upon
the Company obtaining approval of ASX for re-listing
of the shares in the Company. |
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Under the terms of the Agreement, the Company will
acquire OGL for an initial consideration of A$28 million
payable in Company shares to be issued at 20 cents each.
Further consideration of up to A$14.5 million payable
in Company shares to be issued at 20 cents each is payable
upon certain profit-related milestones for 2006. |
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The initial consideration amount of A$28 million is
payable to the Vendor on completion of the transaction,
scheduled at the time shares are issued under this prospectus.
The Vendor is entitled to receive Bonus Consideration
of up to A$14.5 million payable in fully paid ordinary
shares in the Company issued at 20 cents each if the
consolidated entity post-transaction achieves net earnings
(net profit after tax minus minority interests) of more
than A$4 million for the 2006 calendar year. If the
consolidated entity achieves net earnings of less than
A$4 million for the calendar year 2006, no Bonus Consideration
will be paid. For every one dollar in net earnings achieved
above A$4 million, the Vendor will receive A$7.25 in
fully paid ordinary shares in the Company, up to a maximum
of $14.5 million, which would be achieved if total after-tax
profit for the calendar year 2006 reaches A$6 million.
The Bonus Consideration is payable 14 days following
the release of the consolidated entity’s 2006
audited financial accounts for the financial year ending
31 December 2006. The Company has obtained waivers from
Listing Rules 7.3.2 and 7.3.3 to allow the Bonus Consideration
shares to be issued on this basis later than 3 months
after shareholder approval has been given. |
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Re-listing |
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As stated above, the acquisition is conditional on
re-listing on ASX which is expected to occur once the
Company has complied with Chapters 1 and 2 of the ASX
Listing Rules as if it were listing on ASX for the first
time. Application for admission is being made to ASX
within 7 days after the date of the Prospectus. This
will include increasing the spread of shareholders through
the prospectus share issue to a minimum of 400 shareholders
(or, if ASX so determines, 500 shareholders) with at
least $2,000 of shares, as well as various other requirements
and documentation. As at the date of issue of the prospectus
and using 20 cents as the relevant benchmark, there
are approximately 210 such shareholders. The issue of
shares under this Prospectus will assist satisfying
these requirements. Assuming these requirements have
been satisfied, it is anticipated that completion will
occur immediately on or after the issue of the shares
under this Prospectus. Otherwise, or if the Corporations
Act otherwise requires, application moneys will be refunded
in full without interest. It is also intended that the
shares be re-listed on AIM, where trading was suspended
following announcement of the proposed acquisition. |
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Change of financial year periods
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The Company's current financial period is from 1 July
to 30 June, and e-pay’s financial period is 1
April to 31 March. On completion of the transaction,
the new consolidated entity’s financial year will
be changed to a calendar year with its first full year
being calendar year 2006. |
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