1. INTRODUCTION
The Board of Directors of HELP INTERNATIONAL CORPORATION BERHAD ("HELP" or "Company") is pleased to announce that the Company had on 6 August 2007 entered into a conditional Share Acquisition Agreement ("SAA") with Excellenex Sdn Bhd ("ESB" or "Vendor") to acquire the entire issued and paid-up capital of Sepang Education Centre Sdn. Bhd. ("SEC") comprising 5,000,000 ordinary shares of RM1.00 each ("Sale Shares") for a total cash consideration of RM2.0 million.
2. DETAILS OF THE PROPOSED ACQUISITION
2.1. Purchase consideration
The Proposed Acquisition is entered into for a total cash consideration of RM2.0 million ("Purchase Consideration").
The Purchase Consideration was arrived at based on a "willing buyer willing seller" basis after taking into consideration the prospective business potential and future earnings potential of SEC.
2.2. Salient terms of the SAA
The salient details of the SAA are set out, inter-alia as follows:-
2.2.1 The Purchase Consideration shall be payable by the Company as follows:
i. upon execution of SAA, RM600,000 representing 30% of the Purchase Consideration as a refundable deposit and towards part payment of the Purchase Consideration; ii. upon the Company being satisfied with the results of the due diligence review conducted by the Company and its advisers on SEC ("Due Diligence"), RM400,000 representing 20% of the Purchase Consideration as a further refundable deposit and towards part payment of the Purchase Consideration; and
iii. on the date of completion of the Proposed Acquisition in accordance with the terms of the SAA, the balance RM1,000,000 representing 50% of the Purchase Consideration.
Pursuant to the terms of the SAA, the deposits referred to in paragraphs (i) and (ii) above are refundable in full by the Vendor in the event the SAA fails to become unconditional or is earlier terminated prior to completion.
2.2.2 The completion of the sale and purchase of the Sale Shares is conditional upon the followings:
i. the approval of the Foreign Investment Committee of Malaysia to the sale and purchase of the Sale Shares in accordance with the SAA; ii. the Company being satisfied with the results of the Due Diligence within forty five (45) days from the date of the SAA; iii. the approval of the Minister of Higher Education or Registrar General of Private Higher Educational Institutions, as applicable, to the sale and purchase of the Sale Shares in accordance with the SAA, as required under the Private Higher Educational Institutions Act 1996 (Act 555); and iv. the approval or waiver of any other relevant authorities for the sale and purchase of the Sale Shares in accordance with the SAA, if required.
2.3 Source of funding
The Purchase Consideration will be satisfied entirely in cash and financed through internally generated funds.
2.4 Liabilities to be assumed
There are no liabilities, including contingent liabilities and guarantees of ESB to be assumed by HELP, arising from the Proposed Acquisition.
3. INFORMATION ON SEC
SEC was incorporated as a private company limited by shares on 8 July 1992 and has its registered office at Level 5, Klang Parade, 2112, Jalan Meru, 41050 Klang, Selangor Darul Ehsan.
SEC is principally involved in the business of a private commercial college for higher education known as S.I.T International College ("SIT"). As at the date of this announcement, SEC's authorised share capital is RM10,000,000 divided into 10,000,000 ordinary shares of RM1.00 each and its issued and paid-up capital is RM5,000,000 divided into 5,000,000 ordinary shares of RM1.00 each. The net loss (after deducting all charges and taxation and excluding extraordinary items) and net liabilities of SEC for the year ended 30 June 2007 was RM2.8 million and RM2.4 million respectively.
4. RATIONALE FOR THE PROPOSED ACQUISITION
The Proposed Acquisition will provide HELP with the opportunity to enhance its growth as the Proposed Acquisition is expected to enable HELP to derive immediate benefits in terms of having an enlarged presence in the education industry, as compared to organic growth.
The principal activities of HELP and its subsidiaries ("the Group") are in the education and related industries. Similarly, SEC is also involved in the provision of university focused education for a range of pre-university, undergraduate degree and professional programs. Hence, the Proposed Acquisition is expected to enable the Group to derive synergistic benefits from SEC within the education and training industry. In addition, the Proposed Acquisition will provide the Group with the opportunity to participate further in the business of providing engineering, pharmacy and professional programs as SEC already has licences, facilities and resources in place.
Further, the Proposed Acquisition is expected to provide an additional revenue stream from the diversification of its current program product stream.
5. PROSPECTS OF SEC
SIT is in the southern corridor of the Klang Valley which is the national growth hub. There is a growing population with high income and hence a growing demand for higher education and vocational based training.
SEC is moving forward towards enhancing program development by implementing several key initiatives which will boost SIT's pool of products in pharmacy, engineering and its Southern New Hampshire University 4+0 degree programs.
SEC is continuing its efforts to enhance efficiency and providing value-added services to its clients. As one of the largest college in Klang, SIT has a potential to dominate the market in this region.
SEC is initiating various efforts overseas related to education services and activities. With the offshore recruitment activities expected to show increase, a positive growth has been forecasted in the coming financial years.
6. RISK FACTORS
The material risk factors associated with the Proposed Acquisition include, but are not limited to, the following:
6.1 Business and operational risk
SEC's business and hence HELP's investment in SEC would be subject to certain risks inherent in the education industry in which SEC is involved. These include, amongst others, the following:
? general and operational business risks within the education industry;
? competition from local and foreign education providers;
? dependency on partnerships and collaboration with foreign university partners for degree programs; and
? changes in the government policies and the regulatory framework governing or affecting the education industry such as licences, registration and certification requirements which may affect SEC's operations.
However, taking into consideration the experience and expertise of the management of HELP and SEC in the education industry, the Board of Directors of HELP believes that it will be able to mitigate the effects of the inherent business and operational risks involved in the education industry.
6.2 Non-completion risk
The Proposed Acquisition is subject to the approvals set out in Section 9 below. There is a risk that the approvals may not be granted or the approvals may be subject to conditions which are not favourable to the Company.
7. INFORMATION ON VENDORS
ESB was incorporated as a private company limited by shares on 10 May 2005 and has its registered office at Lot T2, Penthouse Centrepoint, Leboh Bandar Utama, Bandar Utama, Petaling Jaya, 47800 Selangor. The authorised share capital of ESB is RM500,000 divided into 500,000 ordinary shares of RM1.00 each and its issued and paid-up capital is RM200,000 divided into 200,000 ordinary shares of RM1.00 each. The principal activities of ESB are as an investment holding company and provision of consultancy and management services.
The directors and shareholders of the company are Zainurazrein Binti Zainal Abidin, Yee Kar Fong, and Chong Sook Pin. The original cost of investment and date of such investment to the Vendor was RM1.5 million and 5 December 2006 respectively.
8. FINANCIAL EFFECTS
8.1 On share capital and substantial shareholders' shareholdings The Proposed Acquisition will not have any effect on the issued and paid-up share capital of HELP and the substantial shareholders' shareholdings in HELP as the Purchase Consideration for the Proposed Acquisition is satisfied entirely in cash.
8.2 On earnings
The Proposed Acquisition would not have a material effect on the earnings of the Group for the financial year ending 31 October 2007 as the Proposed Acquisition is expected to be completed in the last quarter of 2007. The Proposed Acquisition is anticipated to contribute to the future earnings of the Group.
The Proposed Acquisition would not have a material effect on the net assets and gearing of the Group for the financial year ending 31 October 2007.
9. APPROVALS REQUIRED
The Proposed Acquisition is not subject to the approval of shareholders of the Company. However, as disclosed in Section 2.2.2, apart from the satisfactory results of the Due Diligence, the Proposed Acquisition is subject to the approvals of:
i. Foreign Investment Committee of Malaysia;
ii. Minister of Higher Education or the Registrar General of Private Higher Educational Institutions, as applicable; and
iii. Any other relevant authorities, if required.
The parties to the SAA expect to submit the relevant application to the authorities within one (1) month from the date of this announcement.
10. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
None of the Directors of HELP and/or major shareholders and/or persons connected to them has any interest, direct or indirect, in the Proposed Acquisition.
11. DIRECTORS' RECOMMENDATION
The Board of Directors of HELP, having considered all aspects of the Proposed Acquisition is of the opinion that the Proposed Acquisition is in the best interest of the Company.
12. EXPECTED TIME FRAME FOR COMPLETION
Barring unforeseen circumstances, and subject to the approvals of the relevant authorities, the Proposed Acquisition is expected to be completed by the last quarter of 2007.
To the best knowledge of the Board of Directors of HELP, the Proposed Acquisition does not depart from the SC Guidelines.
14. DOCUMENT AVAILABLE FOR INSPECTION
The SAA is available for inspection at the registered office of HELP during office hours from Mondays to Fridays (except for public holidays) at Level 11, Wisma HELP, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur (Telephone No.: +603-20942000), for a period of three (3) months from the date of this announcement.
This announcement is dated 6 August 2007.
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