News
Advance Synergy Berhad ("ASB") Proposed Restructuring Of Investment In Isynergy Sdn Bhd ("Isynergy")
BackApr 10, 2006
| General Announcement Reference No KK-060410-70093 |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 10/04/2006 |
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| Type | : | Announcement |
| Subject | : | ADVANCE SYNERGY BERHAD ("ASB") Proposed Restructuring of Investment in iSynergy Sdn Bhd ("iSynergy") |
Contents :
1. Introduction
We wish to inform the Exchange that the Board of Directors of ASB had on 10 April 2006 approved the proposed restructuring plan of its 51%-owned subsidiary, iSynergy ("Proposed Restructuring").
The principal activities of iSynergy are the provision and marketing of payment and loyalty products and services. iSynergy's scope of business includes the issuing of charge cards, credit cards, prepaid cards, discount cards, reward cards and rebate cards.
Under the Proposed Restructuring:-
i. Designated Payment Instruments ("DPI") business, namely issuing credit cards, charge cards and prepaid cards will be undertaken and housed under a separate entity ("Newco").
Under the Proposed Restructuring:-
i. Designated Payment Instruments ("DPI") business, namely issuing credit cards, charge cards and prepaid cards will be undertaken and housed under a separate entity ("Newco").
ii. iSynergy will continue to operate its existing non-DPI business like loyalty cards, charge cards, prepaid cards, discount cards, reward cards and rebate cards.
2. Proposed Restructuring
Synergy Cards Sdn Bhd (formerly known as Super Odyssey Sdn Bhd), a wholly-owned subsidiary of ASB, has been identified as the Newco. It is presently a dormant company with an issued and paid-up share capital of RM2.00.
Under the Proposed Restructuring, ASB, Advance Synergy Capital Berhad (a public listed subsidiary of ASB) ("ASC") and Interpay International Resources Ltd ("IIR") will respectively subscribe in the form of cash for 1,019,998, 580,000 and 400,000 ordinary shares of RM1.00 each at par to increase the issued and paid-up share capital of Newco to RM2,000,000.00. Consequently, ASB, ASC and IIR would hold 51%, 29% and 20% respectively in the enlarged share capital of Newco. ASB's subscription will be funded by internal resources. In addition, ASC will subscribe (in the form of cash) for 8,000,000 redeemable non-convertible preference shares of RM1.00 each to be issued at RM1.00 each by Newco.
Newco will undertake to apply for the relevant principal licences, franchises or agencies and approvals from the relevant authorities, organisations or institutions to carry out the DPI business.
The existing business infrastructure of iSynergy which includes customer databases and intellectual property for the conduct of the payment card business will be transferred from iSynergy to Newco at a cash consideration of RM6.0 million subject to such terms and conditions to be set out in an agreement between Newco and iSynergy ("Proposed Acquisition of Assets"). The cash consideration was arrived at based on a willing buyer-willing seller basis and it will be funded by Newco from the cash subscription of ordinary shares and preference shares in Newco.
There are no expected gains or losses arising from the Proposed Acquisition of Assets for ASB Group as both iSynergy and Newco are / will be 51%-owned subsidiaries of ASB.
With the DPI business now to be undertaken by Newco, iSynergy will rent to Newco the necessary DPI business software to conduct the business. The rental will be on a 2-year renewable tenure basis subject to such terms and conditions to be set out in an agreement between Newco and iSynergy ("Proposed Rental of Systems").
Under the Proposed Restructuring, the share capital of iSynergy will also be restructured to reflect the same shareholding structure as in Newco such that ASB, ASC and IIR will hold 51%, 29% and 20% respectively in the enlarged share capital of iSynergy. The increase in the share capital will be undertaken via capitalization of amounts owing by iSynergy to ASB and ASC.
Under the Proposed Restructuring, ASB, Advance Synergy Capital Berhad (a public listed subsidiary of ASB) ("ASC") and Interpay International Resources Ltd ("IIR") will respectively subscribe in the form of cash for 1,019,998, 580,000 and 400,000 ordinary shares of RM1.00 each at par to increase the issued and paid-up share capital of Newco to RM2,000,000.00. Consequently, ASB, ASC and IIR would hold 51%, 29% and 20% respectively in the enlarged share capital of Newco. ASB's subscription will be funded by internal resources. In addition, ASC will subscribe (in the form of cash) for 8,000,000 redeemable non-convertible preference shares of RM1.00 each to be issued at RM1.00 each by Newco.
Newco will undertake to apply for the relevant principal licences, franchises or agencies and approvals from the relevant authorities, organisations or institutions to carry out the DPI business.
The existing business infrastructure of iSynergy which includes customer databases and intellectual property for the conduct of the payment card business will be transferred from iSynergy to Newco at a cash consideration of RM6.0 million subject to such terms and conditions to be set out in an agreement between Newco and iSynergy ("Proposed Acquisition of Assets"). The cash consideration was arrived at based on a willing buyer-willing seller basis and it will be funded by Newco from the cash subscription of ordinary shares and preference shares in Newco.
There are no expected gains or losses arising from the Proposed Acquisition of Assets for ASB Group as both iSynergy and Newco are / will be 51%-owned subsidiaries of ASB.
With the DPI business now to be undertaken by Newco, iSynergy will rent to Newco the necessary DPI business software to conduct the business. The rental will be on a 2-year renewable tenure basis subject to such terms and conditions to be set out in an agreement between Newco and iSynergy ("Proposed Rental of Systems").
Under the Proposed Restructuring, the share capital of iSynergy will also be restructured to reflect the same shareholding structure as in Newco such that ASB, ASC and IIR will hold 51%, 29% and 20% respectively in the enlarged share capital of iSynergy. The increase in the share capital will be undertaken via capitalization of amounts owing by iSynergy to ASB and ASC.
3. Rationale for the Proposed Restructuring
The Proposed Restructuring is in line with ASB's efforts to rationalize and provide its card payment division with a sound financial footing to embark and expand into the lucrative and fast growing credit card business.
4. Effects of the Proposed RestructuringThe Proposed Restructuring will not have any impact on the share capital and substantial stockholder's stockholding of ASB as well as the net tangible assets per stock unit of ASB Group. The Proposed Restructuring will not have any material impact on the earnings per stock unit of ASB Group for the financial year ending 31 December 2006 but is expected to contribute positively to the long term earnings of ASB Group.
5. Approvals SoughtiSynergy and/or Newco will seek approvals from the following parties for the conduct of the DPI business:-
a. Bank Negara Malaysia;
b. MasterCard International Incorporated and/or Visa Card International Incorporated; and
c. any other relevant authorities, organisations or institutions.
a. Bank Negara Malaysia;
b. MasterCard International Incorporated and/or Visa Card International Incorporated; and
c. any other relevant authorities, organisations or institutions.
6. Directors' and Substantial Stockholders' Interests
Save as disclosed below, none of the Directors, major stock/shareholders and/or persons connected with the Directors or major stock/shareholders of ASB, ASC and/or Newco has any interest, direct or indirect, in the Proposed Restructuring.
None of the directors and major stockholders/shareholders of ASB, ASC and/or Newco and/or persons connected to them have any interests in ASC or Newco other than via ASB. IIR is a related party of ASB by virtue of being a major shareholder of both iSynergy and Newco, which are subsidiaries of ASB. However, IIR does not have any interest in ASB or ASC. IIR is not a party to the Proposed Restructuring except for the Proposed Acquisition of Assets and Proposed Rental of Systems.
None of the directors and major stockholders/shareholders of ASB, ASC and/or Newco and/or persons connected to them have any interests in ASC or Newco other than via ASB. IIR is a related party of ASB by virtue of being a major shareholder of both iSynergy and Newco, which are subsidiaries of ASB. However, IIR does not have any interest in ASB or ASC. IIR is not a party to the Proposed Restructuring except for the Proposed Acquisition of Assets and Proposed Rental of Systems.
7. Statement by Directors
The Board of Directors of ASB, after considering all aspects of the Proposed Restructuring, is of the opinion that the Proposed Restructuring is in the long term interests of ASB, is fair and reasonable to ASB and is not to the detriment of ASB and its stockholders.
[This announcement is dated 10 April 2006]