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Tuan Sing Holdings Limited
17 Jan 2004
Tuan Sing Holdings Limited (the "Company") wishes to announce that the Company's wholly-owned subsidiary, TS Planet Sports Pte. Ltd. (formerly known as TS Land Pte Ltd) ("TS Planet Sports"), has entered into a conditional sale and purchase agreement (the "Agreement") with Dato' Loh Ah Joo ("Dato' Loh"), Mdm Chew Kim Yar ("Mdm Chew") and Pan-West (Private) Limited ("Pan-West"), to acquire a 60% shareholding interest in Pan-West comprising:
(a) 51,750 ordinary shares of S$100 each in the capital of Pan-West (comprising approximately 53.1% of the total issued and paid-up capital of Pan-West) from Dato' Loh; and
(b) 6,750 ordinary shares of S$100 each in the capital of Pan-West (comprising approximately 6.9% of the total issued and paid-up capital of Pan-West) from Mdm Chew,
for an aggregate purchase consideration of S$6,750,000 (the "Acquisition").
2. Information on Pan-West
2.1 Pan-West (Company Registration No. 197000157G) is a company incorporated in Singapore on 6 March 1970 with its registered office at 59 Jalan Pemimpin, #05-00, Singapore 577218. As at the date hereof, Pan-West has an authorised share capital of S$10,000,000 comprising 100,000 ordinary shares of S$100 each and an issued and paid-up capital of S$9,750,000 comprising 97,500 ordinary shares of S$100 each.
2.2 Pan-West and its subsidiaries (the "Pan-West Group") are in the business of distributing, retailing and marketing golf and golf-related lifestyle products in the region, including but not limited to Singapore, Malaysia and Thailand. The Pan-West Group also manages golf driving ranges and teaching schools and provides other golf-related services.
2.3 The net tangible asset value of the Pan-West Group for the financial year ended 31 December 2002 ("FY2002") is S$4,723,053, based on the Pan-West Group's unaudited proforma consolidated financial statements for FY2002 (the "FY2002 Proforma Financial Statements") (please see note 1 to paragraph 5.1).
3. Purchase Consideration
3.1 The aggregate purchase consideration of S$6,750,000 payable for the proposed Acquisition (the "Purchase Consideration") will be satisfied in cash by the payment of:
(a) S$1,000,000 (the "Deposit") to Dato' Loh upon the signing of the Agreement; and
(b) S$5,750,000 to Dato' Loh and Mdm Chew on completion of the proposed Acquisition.
3.2 The Purchase Consideration was agreed upon based on arms’ length negotiations between TS Planet Sports and Dato' Loh and Mdm Chew on a willing buyer and willing seller basis, after taking into consideration the net profit before income tax, minority interests and extraordinary items attributable to the Pan-West Group of S$2,734,497 as at 31 December 2002, based on the FY2002 Proforma Financial Statements.
3.3 The Company proposes to finance the Purchase Consideration through internal resources.
4. Material Conditions
4.1 The obligation of TS Planet Sports to complete the proposed Acquisition is also conditional upon the following principal conditions, inter alia:
(a) the completion of the outstanding due diligence review by TS Planet Sports of the Pan-West Group and the results of such review being satisfactory to TS Planet Sports;
(b) implementation of a pre-completion restructuring of the Pan-West Group in accordance with the terms of the Agreement to rationalise the Pan-West Group;
(c) the cancellation of the continuing guarantee dated 29 November 1999 given by Pan-West in favour of Overseas Union Bank Limited (now known as United Overseas Bank Limited) pursuant to which Pan-West agreed to stand as a guarantor for facilities granted to Yih Tyng Investments Pte Ltd ("Yih Tyng");
(d) Dato' Loh entering into a full-time service agreement with Pan-West upon the terms of an agreed draft (the "Service Agreement");
(e) presentation of evidence reasonably satisfactory to TS Planet Sports that each of the major brands and principals of Pan-West will continue its current arrangements with Pan-West, following completion; and
(f) there being no material adverse change in the prospects, operations or financial position of the Pan-West Group occurring between the date of the Agreement and the date of completion of the Acquisition.
4.2 The other material terms of the Agreement are, inter alia, set out below.
If any of the conditions precedent to the completion of the Acquisition is not satisfied on the date of completion of the Acquisition and the Agreement is rescinded, Dato' Loh is required to refund the Deposit to TS Planet Sports without interest.
(b) Property Purchase
As a condition to the completion of the Acquisition, TS Planet Sports and Dato' Loh have agreed to procure Pan-West Development Pte. Ltd. ("Pan-West Development"), a wholly-owned subsidiary of Pan-West, to execute a sale and purchase agreement with Yih Tyng pursuant to which Pan-West Development will acquire from Yih Tyng the properties (the "Property") known as 59 Jalan Pemimpin #01-03, #01-04 and #05-01, L & Y Building, Singapore 577218 which are comprised in Lots U76656A, U76657K and U76654P (all of Mukim 18) respectively for an aggregate consideration price of S$6,600,000 (the "Property Consideration").
As at the date hereof, Dato' Loh is a director of Yih Tyng and holds a beneficial interest of up to 50% of the shareholding interest in Yih Tyng. The open market value of the Property, based on the valuation (the "Valuation") on the Property carried out by Jones Lang Lasalle Property Consultants Pte Ltd is S$7,240,000 as at 24 December 2003. The Property Consideration is arrived at on a willing buyer and willing seller basis, taking into consideration the Valuation which supports the Property Consideration.
(c) Post-Completion Restructuring Exercise
Dato' Loh undertakes to TS Planet Sports that, within six months after the date of completion of the Acquisition, he shall take such steps as is within his power to implement, or secure the implementation of a restructuring of the Pan-West Group in accordance with the terms of the Agreement to rationalise and consolidate the Pan-West Group.
(d) Default Put Option and Default Call Option
Under the terms of the Agreement, each of Dato' Loh and TS Planet Sports has the option to either sell his/its entire shareholding interest in Pan-West to the other party or cause the other party to acquire the first party's entire shareholding interest in Pan-West if the second party defaults under the Agreement.
(e) Profit Target
Dato' Loh undertakes to TS Planet Sports that, for the financial period commencing on 1 January 2004 and ending on 31 December 2006 (the "Financial Period"), the audited consolidated net profits after taxation and minority interests of the post-completion restructured Pan-West Group shall be not less than S$5,000,000 ("Profit Target").
If the Profit Target is not achieved, Dato' Loh shall, at the election of TS Planet Sports, pay the deficit to either TS Planet Sports or Pan-West, provided that:
(i) if Pan-West terminates the Employment (as defined in the Service Agreement) before the end of the Financial Period other than pursuant to clause 7.2 of the Service Agreement, Dato' Loh shall not be required to fulfil the Profit Target and further that Dato' Loh shall be entitled to exercise the default put option described in paragraph 4.2(d); and
(ii) if Pan-West terminates the Employment before the end of the Financial Period pursuant to clause 7.2 of the Service Agreement or Dato' Loh terminates the Employment by giving notice in writing pursuant to clause 7.1 of the Service Agreement or otherwise, Dato' Loh's obligation to fulfil the Profit Target shall remain in full force and effect notwithstanding the termination of the Employment and further that TS Planet Sports shall be entitled to the default call option described in paragraph 4(d).
5. Financial Effects
5.1 For illustration purposes only, based on the financial statements of the Company and its subsidiaries (the "Group") for FY2002 and assuming that:
(a) the Purchase Consideration being satisfied in full by cash;
(b) no post-completion adjustments by way of Profit Target deficits payable by Dato' Loh are made to the Purchase Consideration; and
(c) neither Dato' Loh nor TS Planet Sports has exercised his/its default put option or default call option under the Agreement,
the financial effects of the Acquisition on the Company would be as follows:
(i) the net tangible assets per share of the Company would remain unchanged at S$0.23, assuming that the Acquisition had been completed on 31 December 2002;
(ii) the net tangible assets per share of the Group would be reduced from S$0.224 to S$0.220, assuming that the Acquisition had been completed on 31 December 2002;
(iii) the loss per share of the Group would be reduced from S$0.057 to S$0.055, assuming that the Acquisition had been completed on 1 January 2002; and
(iv) the net loss of the Group would be reduced from S$64,728,000 to S$62,385,000, assuming that the Acquisition had been completed on 1 January 2002.
(1) The net profits before income tax, minority interest and extraordinary items of S$2,734,497 and net tangible assets of S$4,723,053 of the Pan-West Group is derived from the FY2002 Proforma Financial Statements, which have been prepared based on adjusted audited financial statements of the Pan-West Group as at 31 December 2002, adjusted to take into account the two restructuring exercises to be implemented in the Pan-West Group (comprising the pre-completion and post-completion restructuring exercises to be implemented in accordance with the terms of the Agreement to rationalise and/or consolidate the Pan-West Group).
(2) The loss per share of the Group in FY2002 is calculated on the Group's loss for the year attributable to shareholders of proximately S$64,728,000 divided by the weighted average number of ordinary shares of 1,137,664,182 in issue during that said year.
5.2 The Acquisition is a discloseable transaction for the purposes of Chapter 10 of the Listing Manual of the SGX-ST.
The Directors of the Company views the Acquisition of the Pan-West Group by TS Planet Sports as a unique opportunity to enter into an established regional business with strong network and distribution channels that will expand its revenue streams and improve its profitability.
7. Interests of Directors and Controlling Shareholders
None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the proposed Acquisition.
A copy of the Agreement is available for inspection during normal business hours at the Company’s registered office at 9 Oxley Rise, #03-02, The Oxley, Singapore 238697, for three months from the date of this announcement.
Submitted by Chow Kin Wah, Company Secretary on 17/01/2004 to the SGX