WAVE Entertainment Public Company Limited
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(Translation) Opinion of the Independent Financial Advisor Regarding Acquisition of Assets of WAVE Entertainment Public Company Limited Prepared by Advisory Plus Company Limited March 18, 2014 Table of Contents Page Executive Summary 3 1 Nature and details of the transaction 5 1.1 Type and size of the transaction 5 1.2 Value of consideration 7 2 Details of assets being acquired 8 2.1 Nature of business operation 8 2.2 Capital structure 9 2.3 Board of Directors 9 2.4 Operating results and financial position 10 2.5 Summary of material agreements 16 2.6 Industry and competition overview 22 3 Company profile 26 3.1 Background 26 3.2 Description of business 26 3.3 Revenue structure of the Company and its subsidiaries 28 3.4 Shareholders 28 3.5 Board of Directors 28 3.6 Operating results and financial position of the Company 29 3.7 Overview of industry relating to the Company’s business 37 4 Reasonableness of the transaction 39 4.1 Objective and necessity of the transaction 39 4.2 Advantages and disadvantages of entering into the transaction 40 4.3 Advantages and disadvantages of not entering into the transaction 44 4.4 Potential risks from entering into the transaction 45 5 Fairness of price and conditions for the transaction 47 5.1 Fairness of price 47 5.2 Fairness of conditions for the transaction 66 6 Conclusion of the Independent Financial Advisor’s opinion 67 AP. 029/2557 March 19, 2014 To Board of Directors and Shareholders WAVE Entertainment Plc. Subject Opinion of the Independent Financial Advisor on the acquisition of assets The Board of Directors’ meeting of WAVE Entertainment Plc. (“the Company” or “WAVE”) No. 3/2014, held on March 10, 2014, resolved to grant approval for the Company to acquire the entire shares of Efficient English Services Ltd. (“EES”) from WSI (Thailand) Holding Ltd., Siam Intervest Co., Ltd., and Thailand Prosperity Fund 2, collectively called “the Sellers,” and approval for the Company to sign the Share Sale and Purchase Agreement with the Sellers. After completion of share acquisition under the said agreement, the Company will become a shareholder of EES, owning the entire 1,656,600 shares or 100% of the total number of issued and paid-up shares of EES. The total acquisition price is not more than Baht 800 million. The entering into the above transaction is considered as an acquisition of assets of listed companies under the Notification of the Capital Market Supervisory Board No. ThorChor. 20/2551 Re: Rules on Entering into Material Transactions Deemed as Acquisition or Disposal of Assets and the Notification of the Stock Exchange of Thailand (“SET”) Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (the “Acquisition or Disposal Notification”). The transaction size, calculated by net profit method, is equal to 1,193.55% and thus is deemed as Class 4 Transaction in accordance with the Acquisition or Disposal Notification. Therefore, the Company is obligated to disclose information on the transaction to the SET and to seek approval from the shareholders’ meeting with a required affirmative vote of not less than three-fourths of the total votes of shareholders attending the meeting and having the right to vote, excluding votes of shareholders who have an interest in the transaction. The Company must submit a notice of the shareholders’ meeting together with opinion of an independent financial advisor to the shareholders at least 14 days ahead of the meeting date. The Board of Directors’ meeting resolved to propose the 2014 Annual General Meeting of Shareholders, scheduled for April 25, 2014, to consider and approve the entering into the transaction. Opinion of the Independent Financial Advisor on asset acquisition However, the entry into this transaction qualifies for exemption under Section 24 of the Notification of the SET Board of Governors Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547, and the Company is therefore not required to submit a relisting application to the SET. This is because the acquired business is in a similar line of business or a mutually supporting business to the ongoing business of the Company. The Company has no policy to materially change its core activities and its group of companies, which results from the acquisition of shares in EES, remains qualified for listing on the SET. The Company will not make material change in the composition of its Board of Directors and in the power to control the Company or in its controlling shareholders. Moreover, the transaction is not performed with a connected person of the Company and, thus, is not regarded as a connected transaction under the Notification of the Capital Market Supervisory Board No. ThorChor. 21/2551 Re: Rules for Connected Transactions and the Notification of Board of Governors of the SET Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Connected Transactions B.E. 2546. The notice of the shareholders’ meeting is required to be accompanied by opinion from an independent financial advisor regarding (1) reasonableness and benefits of the transaction to the listed company, (2) fairness of price and conditions for the transaction, and (3) recommendation as to whether the shareholders should vote for or against the transaction together with reasons thereof. In this respect, the Company has appointed Advisory Plus Co., Ltd. as the independent financial advisor (“IFA”) to render opinion to the Company’s shareholders. In providing opinion herein, IFA has considered and analyzed information obtained from the Company’ management, including resolution of the Board of Directors’ meeting No. 3/2014 held on March 10, 2014, the Information Memorandum notified to the SET on March 10, 2014 and its amendments, the Company’s audited consolidated financial statements for the years ended December 31, 2010-2013, EES’s audited financial statements for the years ended December 31, 2007-2013, EES’s financial projection, the Company’s annual registration statement (Form 56-1) ended December 31, 2012, draft Share Sale and Purchase Agreement between the Company and the Sellers, information disclosed on websites of the Stock Exchange of Thailand (“SET”) and the Securities and Exchange Commission (“SEC”), relevant information and documents obtained from the Company and from interviews with its management, together with publicly available information. The opinion rendered herein is based on the assumption that all information and documents available from the Company and the information derived from the interviews with its management are true and correct. IFA has considered such information in a thorough and reasonable manner in accordance with professional best practices. Our rendering of opinion is, moreover, based on the economic environment and the information prevailing at the time of preparing this study only. As such, if there is any significant change in these factors, it will likely have a material impact on our opinion. Our opinion on the acquisition of assets by the Company can be summed up as follows: Page 2 Opinion of the Independent Financial Advisor on asset acquisition Executive Summary The Board of Directors’ meeting of the Company resolved to grant approval for the Company to acquire the entire shares of Efficient English Services Ltd. (“EES”) from WSI (Thailand) Holding Ltd., Siam Intervest Co., Ltd., and Thailand Prosperity Fund 2, collectively called “the Sellers,” and approval for the Company to sign the Share Sale and Purchase Agreement with the Sellers. After completion of share acquisition under the said agreement, the Company will become a shareholder of EES, owning the entire 1,656,600 shares or 100% of the total number of issued and paid-up shares of EES. The total acquisition price is not more than Baht 800 million. The entering into the above transaction is considered as an acquisition of assets under the notification of the Securities and Exchange Commission regarding acquisition or disposal of assets and the Notification of the Stock Exchange of Thailand Re: Disclosure of Information and Other Acts of Listed Companies Concerning the Acquisition and Disposition of Assets B.E. 2547 (the “Acquisition or Disposal Notification”). The transaction size, calculated by net profit method, is equal to 1,193.55% and thus is deemed as Class 4 Transaction in accordance with the Acquisition or Disposal Notification. Therefore, the Company is obligated to disclose information on the transaction to the SET and to seek approval from the shareholders’ meeting with a required affirmative vote of not less than three-fourths of the total votes of shareholders attending the meeting and having the right to vote, excluding votes of shareholders who have an interest in the transaction. However, in entering into the transaction, the Company is not required to seek approval from the SET for relisting of its securities because the said asset acquisition qualifies for exemption from submitting a relisting application in accordance with the Acquisition or Disposal Notification. WAVE engages in the production and distribution of television programs and related services to Thai TV Color Channel 3 (“Thai TV Channel 3”). Currently, the television broadcasting in Thailand is on the verge of migration from an analog broadcasting system to a digital technology which provides greater sound and picture quality. The National Broadcasting and Telecommunications Commission (“NBTC”) organized an auction for licenses to operate commercial service digital television broadcasting on 24 channels and announced names of the bid winners in January 2014. At such auction, Thai TV Channel 3 won the bid for three channels. Amid the said broadcasting industry development, the Company, as a television program provider for Thai TV Channel 3, has devised a strategy and plan to produce new television programs for the three digital TV channels that Thai TV Channel 3 won the bid for.