CATCHA

0.285

-0.005 (-1.7%)

PROPOSED ACQUISITION BY IMEDIA ASIA SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF CATCHA DIGITAL BERHAD ("CATCHA"), OF 30% EQUITY INTEREST IN HEADLINE MEDIA SDN BHD ("HEADLINE MEDIA") FOR A CONSIDERATION OF RM1,235,000 ("PURCHASE CONSIDERATION") ("PROPOSED ACQUISITION")

CATCHA DIGITAL BERHAD

Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-11102023-00002
Subject PROPOSED ACQUISITION BY IMEDIA ASIA SDN BHD, A WHOLLY-OWNED SUBSIDIARY OF CATCHA DIGITAL BERHAD ("CATCHA"), OF 30% EQUITY INTEREST IN HEADLINE MEDIA SDN BHD ("HEADLINE MEDIA") FOR A CONSIDERATION OF RM1,235,000 ("PURCHASE CONSIDERATION") ("PROPOSED ACQUISITION")
Description
CATCHA DIGITAL BERHAD ("CATCHA DIGITAL" OR "THE COMPANY")

 - PROPOSED ACQUISITION BY IMEDIA ASIA SDN BHD (A WHOLLY-OWNED SUBSIDIARY OF CATCHA DIGITAL) ("IMEDIA" OR THE "PURCHASER") OF 30% EQUITY INTEREST IN HEADLINE MEDIA SDN BHD ("HEADLINE MEDIA") FOR A CASH CONSIDERATION OF RM1,235,000.00 ("PROPOSED ACQUISITION")
Query Letter Contents

We refer to your Company’s announcement dated 9 October 2023, in respect of the aforesaid matter ("Announcement").
In this connection, kindly furnish Bursa Securities with the following additional information for public release:-

1) The names of the directors and substantial shareholders of Dotace Interative Sdn Bhd, together with their direct and indirect shareholdings in Dotace Interative Sdn Bhd. 
2) The effect of the Proposed Acquisition on Catcha’s earnings per share and net assets per share. 
3) To state whether shareholders’ approval will be sought, in the event the Post-Completion Sum (as defined in the Announcement) is satisfied by the issuance of new ordinary shares in Catcha (“Catcha Shares”) (“Consideration Shares”). 
4) The weighted average market price for Catcha Shares for the 5 market days before the date on which the terms of the Proposed Acquisition were agreed upon. 
5) The following information in relation to the Consideration Shares that may be issued pursuant to the Proposed Acquisition:

  • the basis of determining the issue price of the Consideration Shares;
  • the ranking of the Consideration Shares; and
  • whether listing will be sought for the Consideration Shares. 

6) In relation to Clause 4.2(b)(1) of the share sale agreement for the Proposed Acquisition, to state the types of post completion adjustments for which the Retention Sum (as defined in the Announcement) may be utilised to offset against. 
7) The basis of arriving at the consideration of RM4,000,000 (“Option Price”) for iMedia Asia Sdn Bhd to acquire an additional 50% equity interest in Headline Media (“Option”). 
8) The justification for the higher consideration per share computed based on the Option Price, as compared to the Purchase Consideration. 

9) The manner in which the Option Price will be satisfied including the terms of any arrangement for payment on a deferred basis. If the Option Price is to be satisfied by cash, to also state the source(s) of funding and the breakdown.
10) Whether the exercise of the Option will be subject to shareholders’ approval.

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

 

Yours faithfully,
Listing 
Regulation

Cc : Market Surveillance Dept. , Securities Commission (via fax)

Reference is made to the Company’s announcement dated 9 October 2023 in relation to the Proposed Acquisition and Bursa Securities’ query letter dated 11 October 2023 (Ref No. IQL-11102023-00002).

 

The Board wishes to announce the following additional information:

 

1. The names of the directors and substantial shareholders of DISB together with their direct and indirect shareholdings in DISB. 

 

As at the LPD, the sole director of DISB is Boey Mei Chen, and the shareholders of DISB are Ashita Technology Sdn Bhd (51%% equity interest) and Boey Mei Chen (49% equity interest).

 

As at the LPD, the directors of Ashita Technology Sdn Bhd are Tan Honjian and Lim Beng Choo and the shareholders of Ashita Technology Sdn Bhd are Ashita Group Sdn Bhd (70% equity interest) and AEI Technology Services PLT (30% equity interest).

 

 

2. The effect of the Proposed Acquisition on Catcha Digital’s earnings per share and net assets per share. 

 

The Proposed Acquisition is not expected to have any material effect on the earnings per Catcha Digital Share for FYE 31 December 2023 and net assets per Catcha Digital Share as at the end of FYE 31 December 2023.

 

3. To state whether shareholders’ approval will be sought, in the event the Post-Completion Sum (as defined in the Announcement) is satisfied by the issuance of new ordinary shares in Catcha Digital (“Catcha Digital Shares”) (“Consideration Shares”). 

 

While the option is available for Catcha Digital to pay the Post-Completion Sum via issuance of Catcha Digital Shares, the Company does not intend to embark on this option but rather satisfy the Post-Completion Sum via cash only. The is premised on the fact that the Purchase Consideration is only RM1.235 million and the Group’s internal cash balances (which stood at RM10.19 million as at the LPD) is sufficient to fully satisfy the Purchase Consideration in cash.

 

In this instance, the Proposed Acquisition is not subject to the approval of shareholders of Catcha Digital or any other relevant authorities for the issuance of Consideration Shares.

 

 

4. The weighted average market price for Catcha Digital Shares for the 5 market days before the date on which the terms of the Proposed Acquisition were agreed upon. 

 

Not applicable as the Company will not issue any Consideration Shares for the payment of the Purchase Consideration.

 

5. The following information in relation to the Consideration Shares that may be issued pursuant to the Proposed Acquisition:

  • the basis of determining the issue price of the Consideration Shares;
  • the ranking of the Consideration Shares; and
  • whether listing will be sought for the Consideration Shares. 

 

Not applicable as the Company will not issue any Consideration Shares for the payment of the Purchase Consideration.

 

 

6. In relation to Clause 4.2(b)(1) of the share sale agreement for the Proposed Acquisition, to state the types of post completion adjustments for which the Retention Sum (as defined in the Announcement) may be utilised to offset against. 

 

The Retention Sum is meant to address claims that arose from liabilities incurred before Completion but only surfaced post Completion. Here are non-exhaustive examples, which could be offset against the Retention Sum: potential liability risks are tax issues, fines imposed by authorities,  claims of authorities for the repayment of subsidies, liability claims from customers and liability claims arising from content published. 

 

In addition, considering that the Retention Sum forms part of the Post-Completion Sum, it may also be utilised to set-off against the shortfall in the Traffic Guarantee Target pursuant to Clause 4.3 of the SSA.

 

 

7. The basis of arriving at the consideration of RM4,000,000 (“Option Price”) for iMedia Asia Sdn Bhd to acquire an additional 50% equity interest in Headline Media (“Option”). 

 

The Purchase Consideration of RM1.235 million for 30% equity interest in Headline Media would translate to a valuation of approximately RM4.12 million for the entire equity interest of Headline Media at this juncture.

 

Based on the Option Price of RM4.0 million for additional 50% equity interest in Headline Media, this would translate to a valuation of RM8.00 million for the entire equity interest of Headline Media at a later stage.

 

The higher valuation for Headline Media at a later stage is premised on the following considerations:

 

(i)         Headline Media currently has 14.62 million page views and 6.13 million users as at 30 September 2023

 

(ii)        Headline Media is currently at a loss-making position (LAT of RM35,000 for 8M-FPE 31 August 2023);

 

(iii)        with iMedia’s investment and leveraging on the proven track record in digital media solutions, this would improve the business operation and financial performance of Headline Media. When the financial performance of Headline Media improves, the valuation for the entire equity interest in Headline Media would correspondingly increase;

 

(iv)       the Option is merely a right but not the obligation for iMedia to increase its shareholding in Headline Media should the business operation of Headline Media improves and turns into a profit-making position;

 

 

 

(v)        the Board is aware of the fact that there is no certainty for the business operation of Headline Media to improve and turn into a profit-making position. If such is the case, iMedia can choose not to exercise the Option and iMedia’s loss from its investment in Headline Media is limited to its initial investment amount of RM1.235 million (which represents 11.44% of its net assets as at 31 December 2022).

 

8. The justification for the higher consideration per share computed based on the Option Price, as compared to the Purchase Consideration. 

 

Please refer to justifications set out in Section 7 above.

 

9. The manner in which the Option Price will be satisfied including the terms of any arrangement for payment on a deferred basis. If the Option Price is to be satisfied by cash, to also state the source(s) of funding and the breakdown.

 

The Option may be exercisable at any time during the Option Period (i.e. 36 months from Completion Date) by iMedia or its nominee furnishing an Option Notice to the Grantors.

 

iMedia or its nominee shall within the date falling 14 Business Days after the giving of an Option Notice or such extended date as may be mutually agreed upon by the parties, pay the Grantors the Option Price, in proportion to each Grantor’s shareholding percentage in Headline Media. Details as follows:

 

Name

Number of Option Shares

Shareholder proportions (%)

Option Price (RM)

 

 

 

 

TYA

412

20.6

1,648,000

CJW

108

5.4

432,000

DYTR

80

4.0

320,000

ELSY

80

4.0

320,000

SYYE

60

3.0

240,000

DISB

260

13.0

1,040,000

 

 

 

 

Total

1,000

50.0

4,000,0000

 

 

 

 

 

The Option Price is expected to be funded via internal cash balances of Catcha Digital Group.

 

 

10. Whether the exercise of the Option will be subject to shareholders’ approval.

 

The Proposed Acquisition and the exercise of the Option is not subject to the approval of shareholders of Catcha Digital or any other relevant authorities.

 

This is due to the fact that the highest percentage ratio applicable for the Proposed Acquisition pursuant to Rule 10.02(g) of the Listing Requirements, is 9.98%, calculated based on the Purchase Consideration (aggregated with the Option Price of RM4.0 million for additional 50% equity interest in Headline Media) divided by the net assets of Catcha Digital Group as at 31 December 2022.

 

 

This announcement is dated 12 October 2023.





Announcement Info

Company Name CATCHA DIGITAL BERHAD
Stock Name CATCHA
Date Announced 12 Oct 2023
Category General Announcement for PLC
Reference Number GA1-11102023-00025