1. INTRODUCTION
1.1 We refer to the announcements made on 5 September 2017 and 1 June 2018 in relation to the proposed investment via the following agreements with the respective parties as per below:-
(a) Subscription Agreement entered into between Prestariang Capital Sdn Bhd (“Prestariang Capital”) a wholly-owned subsidiary of the Company, OpenLearning Global Pte Ltd (“OGPL”), and Adam Maurice Brimo (“Adam”) on 5 September 2017;
(b) Shareholder’s Agreement entered into between Prestariang Capital, OGPL and OLG Australia Investor Pte Ltd (“OLG Australia”) on 5 September 2017;
(c) Supplemental deed to the Subscription Agreement entered into between Prestariang Capital, OGPL and Adam on 28 May 2018;
(d) Supplemental deed to the Shareholder’s Agreement entered into between Prestariang Capital, OLG Australia, OGPL and Other Investors on 28 May 2018; and
(e) Deed of adherence to the Shareholder’s Agreement entered into between Prestariang Capital, OLG Australia, Magna Intelligent Sdn Bhd (“Magna”), OGPL and Other Investors on 1 June 2018.
1.2 The Company wishes to announce that Prestariang Capital had on 4 November 2019, entered into a conditional Share Exchange Agreement (“the Agreement”) with OpenLearning Limited (“OLL”), Magna and Other Investors for the purpose of exchanging the total of 36.11% of the issued and paid-up share capital of OGPL held in aggregate by Prestariang Capital, Magna and Other Investors (collectively known as “the Parties”) to OLL. The Agreement has become unconditional upon OLL receiving the conditional approval from the Australian Security Exchange (“ASX”) on 2 December 2019. Listing is expected to be on 12 December 2019.
As at the date of the Agreement, Prestariang Capital had subscribed for 5,000,000 A Ordinary Shares (“A Shares”) and 3,263,731 convertible preference shares (“CPS”), representing 14.90% shareholding of the issue and paid-up share capital in OGPL of the pre IPO shares.
2. BACKROUND INFORMATION
2.1 Background information on OLL
OLL develops and operates an online education platform on a software-as-a-service (SaaS) business model whose primary customers are education providers based in Australia and Southeast Asia. OLL primarily operates in Australia, one of the world’s leading higher education market and in Malaysia, one of the largest source countries for international students and an emerging higher education hub with the highest number of Australian and UK branch campuses in the world.
3. DETAILS ON THE SHARE EXCHANGE
3.1 Salient Terms of the Agreement
(a) As at the date of the Agreement, Prestariang Capital is the legal and beneficial owner of 5,000,000 A Shares, and 3,263,731 CPS, representing 14.90% of the issued and paid-up share capital of OGPL in aggregate whereby all CPS shall be converted into A Shares at a ratio of one (1) A Share for every one (1) CPS (the “Conversion”). Upon the Conversion, Prestariang Capital shall hold8,263,731 A shares ("the Exchange Shares”).
(b) Prestariang Capital shall exchange the Exchange Shares in return for OLL shares. Upon the completion of the exchange, Prestariang Capital will hold 13,726,784 shares in OLL.
(c) With the execution of the Agreement, Prestariang Capital has waived all its pre-emption and other rights (if any) which they may have or may be entitled to over any of the Exchange Shares as well as terminate the Shareholders’ Agreement dated 5 September 2017 as supplemented and amended by a supplemental deed thereto dated 28 May 2018 and a deed of adherence thereto dated 1 June 2018.
3.2 Basis and Justification in arriving at the Consideration
Fund raising was necessary to support OLL since it is still in a growth phase and has negative cashflow. After looking at both private equity options and listing, OLL pursued the possibility of listing on the ASX in order to raise funds and continue and expand its operations.
The total number of pre IPO shares of OLL after Conversion are 65,000,000 shares. The minimum amount to be raised is AUD8,000,000 by issuing 40,000,000 of new IPO shares
@ AUD0.20. to the IPO shareholders. The enlarged number of shares in OLL post IPO will be 139,666,641 shares after taking into account the new pre IPO investor, advisor equity and IPO shareholders.
The proceeds from the IPO will enhance OLL’s online education platform in the market and deliver strong growth in its revenue and earnings. This strategic growth will focus on expanding sales, increase market presence in both Australia and beyond and further technical enhancements to the OLL’s platform.
With the additional funding, OLL is expected to grow its market share and progress quickly to profitability and with it Prestariang Capital expects to see growth in the value of its investment.
3.3 Liabilities to be assumed
There are no liabilities, including contingent liabilities and guarantees, to be assumed by Prestariang Capital in undertaking the Share Exchange.
4. SOURCE OF FUNDING
Not Applicable
5. RATIONALE AND PROSPECTS OF THE PROPOSED SHARE EXCHANGE
The share exchange is pre requisite for the IPO of OLL. The IPO exercise of OLL will not only generate cash for OLL it requires for the expansion of the business, but the Company will also have full access to realise its investment via the equity markets.
6. RISK FACTORS
The risks mainly relate to adjustments to the fair value of the investment which will hinge on the quoted share prices of OLL.
7. FINANCIAL EFFECTS OF THE SHARE EXCHANGE
(a) Earnings
The Share Exchange is not expected to have any material effect on consolidated earnings of the Prestariang Group for the financial year ending 30 June 2020.
(b) Net Assets
The Share Exchange is not expected to have any material effect on the Net Assets of Prestariang Group for the financial year ending 30 June 2020.
(c) Gearing
The Share Exchange will not have any effect on the gearing position of Prestariang Group for the financial year ending 30 June 2020.
(d) Share Capital and substantial shareholder’s shareholding
The Share Exchange will not have any effect on the issued and paid-up share capital and substantial shareholder’s shareholding of Prestariang.
8. PERCENTAGE RATIOS
The highest percentage ratio applicable to the Investment is 7.4% based on the latest audited financial statements of the Company as at 30 June 2019.
9. APROVALS REQUIRED
The Share Exchange is not subject to the approval of the shareholders of Prestariang and/or other regulatory bodies.
10. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED
None of the Board of Directors and/or major shareholders of Prestariang and/or persons connected to the Board of Directors and/or major shareholders of Prestariang have any interest, either direct or indirect in the Agreement.
11. COMPLETION DATE
Barring any unforeseen events arising from the fulfilment of conditions set in the Agreement, the Share Exchange was completed on 2 December 2019.
12. DIRECTORS’ STATEMENT
The Board of Directors of Prestariang Berhad is of the opinion that the Agreement are in the best interest of the Prestariang Group.
13. DOCUMENTS AVAILABLE FOR INSPECTION
A copy of the Agreement dated 4 November 2019, will be made available for inspection at the Company’s registered office at Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan during normal business hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.
This announcement is dated 10 December 2019.
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