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Artivision to pay lower amount to acquire MC Payment under amended deal

CATALIST-LISTED video solutions provider Artivision Technologies has inked an amended and restated conditional sale and purchase agreement (SPA) for the proposed acquisition of electronic payment and online retail business Mobile Credit Payment (MC Payment).

The maximum total consideration for all shares and convertible bonds issued by MC Payment has been lowered to about S$93.3 million under this SPA, which replaces the original agreement dated April 27, 2018.

Previously, the total consideration comprised a base consideration of up to S$80 million, an additional consideration of up to S$20 million, and an amount of up to S$25 million in respect of the acquisition of iFashion Group, an online fashion venture platform that MC Payment had been in the process of acquiring.

Under the amended SPA, the acquisition will no longer include iFashion, because the conditions precedent under the iFashion SPA were not satisfied by the long stop date of Dec 31, 2018, and the iFashion transaction was thus terminated.

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Artivision ceased business operations and became a cash company on Feb 27, 2018, originally having 12 months from that date to secure a new business and stay listed on the Catalist board. In May 2018, it entered into a reverse takeover deal to give up a 70 per cent stake in exchange for MC Payment.

Singapore-based MC Payment provides merchant payment services with digital commerce enabling services. It had about two million ordinary shares and S$5.6 million in outstanding principal amount of Series D convertible bonds as at Tuesday. About S$5.6 million, inclusive of 6 per cent interest, worth of Series D bonds had been earlier converted into ordinary shares, while S$200,000 worth of the bonds had been redeemed as at Tuesday.

Under the amended SPA, the base consideration for the purchase of MC Payment shares will be S$80 million, less the settlement amount paid to holders of Series C bonds which was about S$6.5 million as at Tuesday.

MC Payment is also conducting fundraising activities and may raise additional funds of up to S$9 million, Artivision said on Tuesday. This will be on top of the S$11 million in Series D bonds that MC Payment had issued in 2017 and 2018.

The maximum total consideration of about S$93.3 million will thus comprise the S$80 million base consideration less the S$6.5 million in Series C settlement, the additional funds raised of up to S$9 million, and the S$11 million in issued Series D bonds, less the S$200,000 in redemption amount of Series D bonds.

The total consideration will be satisfied by the allotment and issuance of new Artivision shares at an issue price of 1.05 Singapore cents apiece.

This issue price represents a 110 per cent premium to the volume-weighted average price (VWAP) of 0.5 Singapore cent per share traded on the Singapore Exchange on Sept 10, and an 81 per cent premium to the VWAP of 0.58 cent per share traded for the three months immediately preceding Sept 10.

The proposed acquisition is subject to, among other things, the approval of Artivision’s board and shareholders.

It is also subject to Ching Chiat Kwong, a controlling shareholder of Artivision, voting in favour of the shareholders’ resolution.

The company also announced on Tuesday that it had entered into a settlement agreement with Mr Ching on Sept 12. Artivision will issue about S$10 million worth of new shares to Mr Ching after the completion of the proposed share consolidation. Under the settlement agreement, Mr Ching will acquire all of the company bonds and options from the respective holders. The aggregate principal amount of the company bonds with accrued interest up to June 30 amounted to about S$8.8 million.

In determining the settlement sum of S$10 million to Mr Ching, Artivision took into account, among other things, the financial support that he provided to Artivision in the past three financial years.

Mr Ching, who is also executive chairman and chief executive officer of mainboard-listed property developer Oxley Holdings, holds a 22 per cent stake in Artivision as at Tuesday. After the allotment and issuance of the respective new shares (assuming the total maximum consideration), he will own about 25.8 per cent of the enlarged share capital, and remain as a controlling shareholder.

Artivision is required to remain listed on Catalist until the completion of the transaction. On Aug 29, the company said it had applied for a further six-month extension to Feb 29, 2020, to complete the proposed acquisition and to meet the requirements for a new listing.

The company said on Tuesday that it will despatch a circular to shareholders in due course, setting out the terms of the proposed transactions, the independent valuation report on MC Payment, and the opinion and recommendations of the independent financial adviser.

Artivision also advised its shareholders and potential investors to exercise caution in trading their shares.

The company requested a trading halt on Sept 12. It lifted the trading halt on Tuesday morning before the market opened, after announcing the amended SPA and settlement agreement with Mr Ching.