Oct 7, 2016 - IN REDTONE ASIA INC. 1.0. INTRODUCTION. 1.1 The Board of Directors of REDtone International Berhad (âRIB
REDTONE INTERNATIONAL BERHAD ANNOUNCEMENT PROPOSED DISPOSAL OF THE ENTIRE 92.31% STAKE IN REDTONE ASIA INC. 1.0
INTRODUCTION
1.1
The Board of Directors of REDtone International Berhad (“RIB”) wishes to announce that RIB has on 7 October 2016 entered into a share sale agreement (“SSA”) with Million Vision Development International Limited (“Purchaser”) for the proposed disposal of its entire 92.31% equity interest comprising 260,619,365 common shares of USD0.0001 each in REDtone Asia Inc. (“REDtone Asia”), a company quoted on the Over-The-Counter Bulletin Board, United States of America (“USA”) (“Sale Shares”) to the Purchaser for a consideration of RMB38.31 million (equivalent to RM23.78 million) (“Proposed Disposal”) to be satisfied in the following manner:i)
an assumption of debt by the Purchaser of a sum of RMB21.31 million (equivalent to RM13.23 million) being amount owing by the RIB Group to REDtone Asia and/or its subsidiaries (“Debt”); and
ii)
the balance of RMB17.00 million (equivalent to RM10.55 million) in cash (“Cash Consideration”).
(Exchange rate is assumed at: RMB1.0000 = RM0.6208 = USD0.1500)
2.0
DETAILS OF THE PROPOSED DISPOSAL
2.1
The consideration of RMB38.31 million was arrived at on a “willing-buyer willingseller” basis after taking into consideration, amongst others, the audited net assets (“NA”) of the REDtone Asia group of companies (“REDtone Asia Group”) as at 30 April 2016 of RM16.85 million, the poor performance and the challenging business environment of the REDtone Asia Group.
2.2
The Sale Shares will be disposed of by RIB free from all encumbrances and with all rights and benefits attaching thereto.
2.3
The Proposed Disposal is expected to be completed within twenty one (21) days from the date of the SSA.
2.4
The Cash Consideration for the Proposed Disposal of about RM10.55 million will be utilized for working capital of the Group.
2.5
RIB’s original cost of investment in REDtone Asia is about RM75.43 million, incurred since 2010. As at 31 July 2016, the carrying value of REDtone Asia at the RIB Group is about RM16.82 million.
2.6
Save for the assumption of Debt, there are no other liabilities to be assumed by the Purchaser pursuant to the Proposed Disposal.
2.7
Upon completion of the Proposed Disposal, the REDtone Asia Group will cease as subsidiaries of RIB.
3.0
INFORMATION ON REDTONE ASIA
3.1
REDtone Asia was incorporated under the laws of Nevada, USA on 6 January 2005 and was quoted on the Over-The-Counter Bulletin Board of USA on 9 October 2006. Currently, it has an issued and fully paid-up share capital of USD7,755,125 comprising 282,315,356 common shares. REDtone Asia is an investment holding company whilst its core business is carried out by one of its subsidiary companies namely Shanghai Huitong Telecommunication Company Limited, a company incorporated in the People’s Republic of China (“PRC”), as telecommunications provider for mobile, fixed and international gateway services including inter-alia, prepaid and postpaid discounted call services to corporate customers and consumers as well as prepaid mobile air-time top-up and prepaid shopping card in the PRC. The present directors of REDtone Asia are Dato’ Wei Chuan Beng and Mr. Lau Bik Soon.
4.0
INFORMATION ON THE PURCHASER
4.1
The Purchaser was incorporated in Hong Kong as an investment holding company on 28 April 2016 with an issued and paid-up capital of HKD10,000. The present director and shareholder of the Purchaser is Mr. Chan Wa Faat.
5.0
RATIONALE FOR THE PROPOSED DISPOSAL
5.1
The Proposed Disposal will enable RIB to streamline and rationalize its operations including divestment of non-income generating subsidiaries. The REDtone Asia Group has been incurring losses since 2014.
6.0
EFFECTS OF THE PROPOSED DISPOSAL
6.1
The Proposed Disposal will not have any effect on the issued and paid-up share capital and substantial shareholders’ shareholdings of RIB.
6.2
The Proposed Disposal is not expected to have any material impact on the NA and gearing of the RIB Group for the current financial year ending 30 April 2017. However, the Proposed Disposal is expected to result in a pre-tax gain of about RM6.07 million at RIB Group.
7.0
CONDITIONS OF THE PROPOSED DISPOSAL
7.1
The Proposed Disposal is not subject to the approval of the shareholders of RIB or any regulatory authority.
8.0
DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
8.1
None of the Directors and major shareholders of RIB and/or persons connected with them has any interest, direct or indirect, in the Proposed Disposal.
9.0
DIRECTORS’ RECOMMENDATION
9.1
Having considered all aspects of the Proposed Disposal, the Board of Directors of RIB is of the opinion that the Proposed Disposal is in the best interest of the Group.
10.0
PERCENTAGE RATIO
10.1
The highest percentage ratio applicable to the Proposed Disposal pursuant to Paragraph 10.02(g) of Bursa Malaysia Securities Berhad’s ACE Market Listing Requirements (“Listing Requirements”) is about 17.93% (based on the audited consolidated financial statements of RIB for the financial period ended 30 April 2016). This Announcement is also made pursuant to Paragraph 9.19 (25) of the Listing Requirements as the REDtone Asia Group will cease as subsidiaries of RIB upon completion of the Proposed Disposal.
11.0
DOCUMENTS AVAILABLE FOR INSPECTION
11.1
The SSA is available for inspection at the Registered Office of RIB at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur during normal office hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this Announcement.
This Announcement is dated 7 October 2016.
