Sign In
3 Dec 2008 07:00
RedHot Media International Limited
('RedHot' or the 'Company')
Expansion in the Financial Products Marketing Sector
3 December 2008
The Directors of RedHot Media International Limited are pleased to announce the restructuring and expansion through acquisition of its activities in the financial products marketing sector (the "Transaction").
The Malaysian financial products marketing sector has become an early adopter of the Company's AxChange barter exchange media broking model. In order to take full advantage of the opportunity available to the Company, it has formed a new subsidiary to focus on this sector; Ausscar Group Sdn. Bhd. ("AGSB"). The Company has transferred all its existing activities within the financial products marketing sector into AGSB.
The initial consideration for the Acquisition is 642,800 RM1.00 convertible preference shares (the "CPS") in AGSB. Through his holding of the CPS, the Vendor will obtain a 30% interest in the enlarged business.
Mr Lee has agreed to become the Chief Executive Officer of AGSB for a minimum period of 4 years.
Additional cash consideration of RM0.3m, RM0.3m and RM0.2m will be payable if AGSB achieves a post-tax profit of RM0.5m in 2008, RM0.8m in 2009 and RM1.5m in 2010 respectively. If the 2010 profit target is achieved, the Vendor will also be issued with shares in the Company to the value of RM0.5m, based on the prevailing market price at the time that the 2010 audit of AGSB is completed.
The Acquisition was identified due to ACHSB's and OWASB's Capital Markets Services License in Financial Planning, their existing reach to a wide network of insurance agents and consumers (including Mitsui Sumitomo Insurance Group, Am Assurance, Phillip Capital Management Bhd., RHB Unit Trust, Matrix Valley Holdings Limited) as well as their online financial planning platform which is under development.
The Directors also believe that the Transaction will provide the following benefits to the enlarged RHMI group:
This announcement should be read in conjunction with the Admission Document. Terms defined in the Admission Document have the same meaning when used in this announcement.
For further information, contact:
RedHot Media International Limited
Melissa Gilmour or +44 7970 767869
Cheong Chia Chieh or +601 2329 5522
Raymond Hor +603 7651 0188
Blomfield Corporate Finance Limited (Nominated Adviser) +44 207 489 4500
James Pinner or
Nick Harriss
Religare Hichens, Harrison plc (Broker) +44 207 382 4450
Daniel Briggs or
Colin Rowbury
Notes to editors:
Exchange rate: £1 = RM5.57
RedHot Media International Limited (AIM: RHM), is a Cayman Islands incorporated holding company. Its primary activity is that of media broking group, including an innovative barter sales trading activity, in Malaysia and the People's Republic of China ("PRC"), with the majority in Malaysia. As a media broker it purchases advertising space on behalf of its clients and earns commissions from the media providers based on the amount of advertising purchased.
RedHot also acts, to a lesser extent, as a non-stockholding distributor for certain clients (for whom it also acts as a media broker) with the intention of generating higher margins for the Group than would be obtained in conventional media buying.
Using this distribution based business model (AxChange), which the Directors aim to grow, RedHot enters into a contract to draw down various lines of inventory and then, as the inventory is sold through RedHot's distribution network, the proceeds from the sales are used to purchase media space for the same client.
The AxChange business model has been designed to free up working capital; allowing RedHot's customers to pay for advertising and assist new entrants into Malaysia & China (where capital controls are still in place) in selling their products using RedHot's established distribution network. RedHot also believes the model provides benefits to its distributors; providing them with lower unit prices and access to credit facilities to which they otherwise would not have access.
The Company aims to extend this model to work in other Asian countries; initially China (initially opening offices in Beijing, Shanghai, Guangzhou and Macau) followed by Vietnam (initially opening offices in Ho Chi Minh City and Hanoi).
Follow the stocks
