Further to our announcement of 29 June 2004 (the "Announcement") relating to the proposed acquisition of the Kingsmen Affiliates, the Board of Directors of Kingsmen Creatives Ltd. (the "Company") wishes to clarify the following:-
Query:-
(1) Please provide the basis and date of the valuation conducted by NMG Financial Service Consultants on the value of the interest of Kingsmen Affiliates, as required by Rule 1010(5).
The valuation conducted by NMG Financial Service Consultants ("NMG") dated 11 June 2004, which appraised the fair value of the Kingsmen Affiliates as at 31 December 2003, was based on a discounted cash flow analysis using both historic results and projected future results, which includes the use of variable assumptions on a best-estimate analysis. Independent market analysis and company benchmarking was conducted by NMG to inform the best-estimates.
Query:-
(2) Please provide the basis used for arriving at the issue price of S$0.21, as required by Rule 1010(3).
Under the terms of the Second Share Acquisition Agreement (as defined in the Announcement), the issue price was to be:-
(i) the price representing the weighted average value of trades done on the SGX-ST for 5 full market days prior to the signing of the Second Share Acquisition Agreement; or
(ii) the price representing a ten per cent discount to the weighted average value for trades done on the SGX-ST for the full market day on the date of the signing of the Second Share Acquisition Agreement,
whichever is the higher.
The date of the signing of the Second Share Acquisition Agreement was 24 June 2004. The price representing the weighted average value of trades done on the SGX-ST for 5 full market days prior to 24 June 2004 was S$0.21. The price representing a ten per cent discount to the weighted average value for trades done on the SGX-ST for the full market day on 23 June 2004, the day prior to the signing of the Second Share Acquisition Agreement, was S$0.19. In accordance with the terms of the Second Share Acquisition Agreement, the issue price of S$0.21 was arrived at.
Query:-
(3) Please provide whether or not the audit committee of the issuer is of the view that the transaction is on normal commercial terms, and is not prejudicial to the interests of the issuer and its minority shareholders, as required by Rule 917(4)(a)(i).
Having considered, inter alia, the terms of the proposed Acquisition and after discussion with the independent financial adviser, PrimePartners Corporate Finance Pte Ltd, the Audit Committee is of the preliminary opinion that the interested person transaction described in paragraph 7 of the Announcement is on normal commercial terms and is not prejudicial to the interests of the Company and its minority shareholders.