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Artivision Technologies enters into reverse takeover to acquire MC Payment

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Johnny Ng, Director of MC Payment; Robson Lee, Partner of Gibson, Dunn & Crutcher LLP; Anthony Koh, Founder & CEO of MC Payment; Susan Choo, Ex-Financial Controller of Artivision; Ching Chiat Kwong, controlling shareholder of Artivision.

VIDEO solutions provider, Artivision Technologies is entering into a reverse takeover deal to give up a 70 per cent stake in the company in exchange for an electronic payment and online retail business, Mobile Credit Payment Pte Ltd (MC Payment).

In conjunction with the proposed acquisition, the company has proposed to undertake a share consolidation to convert every 20 existing shares into one consolidated share. 

The total consideration shall be satisfied via the allotment of up to 446.4 million consideration shares at the post-share consolidation issue price of S$0.28 per consideration share (or S$0.014 per share on a pre-share consolidation basis). 

The issue price of S$0.014 per share represents a 9.7 per cent discount to the volume-weighted average price (VWAP) of shares traded on the SGX-ST for the three months preceding April 26, being the last market day on which shares of Artivision were traded, prior to the date of the non-binding heads of agreement entered into between both parties. 

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In addition, the total consideration includes a base consideration of up to S$80 million for the purchase of sale shares held by the shareholders of MC Payment; an additional consideration of up to S$20 million; and an amount of up to S$25 million in respect to the acquisition of iFashion Group, an online fashion venture platform that MC Payment is in the process of acquiring. 

Separately, Ching Chiat Kwong, a controlling shareholder of Artivision, and CEO of home-grown property developer Oxley Holdings, has agreed to acquire all of Artivision’s outstanding convertible bonds and options from their respective holders. The company will in turn issue 100 million new consolidated or settlement shares at an issue price of S$0.10 per share (on a post-share consolidation basis), with an aggregate issue price amounting to S$10 million. 

As at May 2, Mr Ching holds 395 million shares in Artivision, representing an approximate 22 per cent stake in the issued and paid-up share capital of the company. Following the proposed acquisition and the issuance of the settlement shares, Mr Ching will own 18.7 per cent of the firm's enlarged share capital, and remain as a controlling shareholder.

This arrangement will enable the company to reduce its liabilities for the purpose of undertaking the proposed acquisition, and provide vendors with the assurance that they are entering into a partnership with a supportive major shareholder, who will bring additional value to the group, Artivision said in a press statement. 

In a filing with the Singapore Exchange (SGX) late on Wednesday night, Artivision also said that it has been exploring business opportunities for the group since the disposal of its subsidiary Artimedia Group in August last year. The search for business opportunities became a priority with the company’s decision not to renew its subsidiary, Colibri Assembly Thailand's (CAT) agreement with its only contract manufacturing customer. 

With effect from Feb 27, 2018, CAT ceased its business operations, and Artivision, without any operating subsidiaries or businesses, became a cash company. To remain listed on the Catalist board, Artivision has 12 months from Feb 27 to secure a new business. 

Therefore, the proposed acquisition of MC Payment presents an opportunity to acquire a new business, meet the Catalist ruling and enhance value for shareholders, Artivision said. 

The board also believes that MC Payment is "well positioned to capitalise on Singapore’s recent push towards cashless payments, and that there is strong and increasing demand for such e-payment systems in the Asia-Pacific region".

Among other things, the deal is subject to approval from the company's board and shareholders, the proposed share consolidation being effective, the completion of due diligence, and an independent valuation report expressing that the value of the target group, MC Payment, to be equivalent or more than S$80 million. 

Shares in Artivision last traded unchanged at S$0.014 apiece on April 26.