News
Joint Venture Agreement Between RGB Ltd. ("RGBL"), A Wholly Owned Subsidiary Of Dreamgate Corporation Bhd. ("DCB") With OMMCO Investment Co., Ltd. ("OMMCO") To Establish A Joint Venture Company In The Federal Territory Of Labuan, Malaysia, To Be Called RGB OMMCO Ltd. ("ROML") ["Proposal"]
BackMar 07, 2008
1. INTRODUCTION
The Board of Directors of Dreamgate Corporation Bhd. ("DCB") wishes to announce that its wholly owned subsidiary, RGB Ltd. ("RGBL") had on 6 March 2008 entered into a Joint Venture Agreement ("JVA") with OMMCO Investment Co., Ltd. ("OMMCO") to co-operate for the purposes of investment in the projects in Cambodia ("the Business") by way of setting up a joint venture company to be called RGB OMMCO Ltd. ("ROML").
2. BACKGROUND INFORMATION
The Board of Directors of Dreamgate Corporation Bhd. ("DCB") wishes to announce that its wholly owned subsidiary, RGB Ltd. ("RGBL") had on 6 March 2008 entered into a Joint Venture Agreement ("JVA") with OMMCO Investment Co., Ltd. ("OMMCO") to co-operate for the purposes of investment in the projects in Cambodia ("the Business") by way of setting up a joint venture company to be called RGB OMMCO Ltd. ("ROML").
2. BACKGROUND INFORMATION
2.1 RGBL
RGBL, a wholly owned subsidiary of DCB, was incorporated in the Federal Territory of Labuan, Malaysia under the Offshore Companies Act 1990 on 6 January 1999 and has its registered office located at Lot 1, 2nd Floor, Wisma Siamloh, Jalan Kemajuan, 87007 Federal Territory of Labuan, Malaysia.
The authorised share capital of RGBL is USD 10,000,000 comprising 10,000,000 ordinary shares of USD1 each and its issued and paid-up share capital is USD5,433,240 comprising 5,433,240 ordinary shares of USD1 each fully paid. The principal activities of RGBL are:
1. sales and marketing of gaming and amusement machines and equipment; and
2. technical support and maintenance as well as management services for gaming and amusement machines and equipment solely for the overseas markets.
2.2 OMMCO
OMMCO was incorporated in Japan on 30 November 2007 with its registered address at Level 4, Nomoto Building, 3-15-12 Higashi Ueno, Taito-ku, Tokyo, Japan.
The issued share capital of OMMCO is 20 shares totaling ?1,000,000. The principal activities of OMMCO are investment and property holding as well as management consulting to overseas casino and hotel businesses.
2.3 ROML
ROML is to be incorporated in the Federal Territory of Labuan, Malaysia under the Offshore Companies Act 1990 as a private company limited by shares for the primary purpose of implementation of the Business in accordance with the terms and conditions of the JVA and any other business related or incidental thereto agreed to by RGBL and OMMCO from time to time in writing.
ROML shall has its business address located at Lots 9 & 10, 3rd Floor, Wisma Wong Wo Lo, Jalan Tun Mustapha, 87000 W.P. Labuan.
The paid up capital of ROML shall be USD100,000 (equivalent to approximately RM317,000 based on an exchange rate of USD1=RM3.17 as at 6 March 2008).
3. RATIONALE AND PROSPECTS
DCB Group is involved in the sales and marketing, technical support and management of gaming and amusement machines and equipment. The joint venture is in line with DCB's expansion plan to seek for new business opportunity in Cambodia, enhancing growth and ultimately to continuously remain competitive in Cambodia.
Accordingly, ROML is expected to contribute positively to the future growth of the DCB Group.
4. CAPITAL AND INVESTMENT OUTLAY
Under the JVA, the shareholding structure of ROML shall be as follows:
The paid up capital of ROML shall be USD100,000 (equivalent to approximately RM317,000 based on an exchange rate of USD1=RM3.17 as at 6 March 2008).
3. RATIONALE AND PROSPECTS
DCB Group is involved in the sales and marketing, technical support and management of gaming and amusement machines and equipment. The joint venture is in line with DCB's expansion plan to seek for new business opportunity in Cambodia, enhancing growth and ultimately to continuously remain competitive in Cambodia.
Accordingly, ROML is expected to contribute positively to the future growth of the DCB Group.
4. CAPITAL AND INVESTMENT OUTLAY
Under the JVA, the shareholding structure of ROML shall be as follows:
| Shareholders |
Percentage
|
| RGBL |
65%
|
| OMMCO |
35%
|
RGBL's initial capital and investment outlay for this joint venture will be USD1,819,350 to be financed by internally generated funds and/or borrowings.
5. RISK FACTORS
The Proposal is subject to various risks inherent in the industry, including business risks and dependence on key personnel, as well as the prevailing economic environment and various other risks.
6. FINANCIAL EFFECTS OF THE TRANSACTION
6.1 Share Capital
The Proposal will not have any effect on the issued and paid-up share capital of DCB.
6.2 Net Assets Per Share
The Proposal will not have any significant effect on the consolidated net assets per share of DCB.
6.3 Earnings Per Share And Gearing
The Proposal is not expected to have any material impact on the DCB Group's earnings per share for the financial year ending 31 December 2008.
The gearing ratio of the DCB Group is expected to increase by 0.04 from 0.49 times, as at 31 December 2006 as the project cost for ROML will be funded via borrowings.
6.4 Substantial Shareholding
The Proposal will not have any effect on the shareholdings of substantial shareholders of DCB.
7. APPROVAL OF SHAREHOLDERS AND RELEVANT GOVERNMENT AUTHORITIES
The Proposal is not subjected to approval from the shareholders of DCB.
8. DIRECTORS', MAJOR SHAREHOLDERS' AND PERSON CONNECTED TO DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS
None of the directors and major shareholders of DCB or persons connected to them have any interest direct and/or indirect in the Proposal.
9. SALIENT FEATURES OF AGREEMENT
9.1 Notwithstanding any other provisions of the JVA, RGBL and OMMCO agree that ROML will not do any of the matters as stipulated under the Reserve Matters in the JVA without the prior approval of RGBL and OMMCO, which approval will not be unreasonably withheld.
9.2 RGBL and OMMCO shall form a joint management amongst them in running of the Business.
9.3 RGBL and OMMCO shall bear the pre-operating cost and operation cost of the Business in accordance to their shareholding, however that the maximum amount of such costs shall be determined through the written agreement between RGBL and OMMCO.
9.4 RGBL and OMMCO shall co-operate with each other and collectively use their best endeavours to implement the Business and cause ROML to carry out the Business in a profitable manner.
9.5 RGBL and OMMCO jointly and severally undertake and shall not, at all material times, commit or cause to commit any act which is or will be detrimental to the Business.
9.6 the JVA shall terminate in accordance with provisions of the JVA.
10. ESTIMATED TIME FRAME FOR THE COMPLETION OF THE PROPOSAL
The Proposal is expected to be completed by end of April 2008.
11. DOCUMENTS FOR INSPECTION
The JVA can be inspected by all shareholders of DCB at the Registered Office of DCB at Suite 2-1, 2nd Floor, Menara Penang Garden, 42-A Jalan Sultan Ahmad Shah, 10050 Penang from Mondays to Fridays (except public holidays) during business hours for a period of two (2) weeks from the date of this announcement.
12. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors having considered all aspects of the Proposal is of the opinion that the Proposal is in the best interest of the Group.
13. COMPLIANCE WITH THE SECURITIES COMMISSION'S POLICIES AND GUIDELINES
To the best of DCB's knowledge, the Proposal has not departed from the Securities Commission's Policies and Guidelines.
This announcement is dated 7 March 2008.
5. RISK FACTORS
The Proposal is subject to various risks inherent in the industry, including business risks and dependence on key personnel, as well as the prevailing economic environment and various other risks.
6. FINANCIAL EFFECTS OF THE TRANSACTION
6.1 Share Capital
The Proposal will not have any effect on the issued and paid-up share capital of DCB.
6.2 Net Assets Per Share
The Proposal will not have any significant effect on the consolidated net assets per share of DCB.
6.3 Earnings Per Share And Gearing
The Proposal is not expected to have any material impact on the DCB Group's earnings per share for the financial year ending 31 December 2008.
The gearing ratio of the DCB Group is expected to increase by 0.04 from 0.49 times, as at 31 December 2006 as the project cost for ROML will be funded via borrowings.
6.4 Substantial Shareholding
The Proposal will not have any effect on the shareholdings of substantial shareholders of DCB.
7. APPROVAL OF SHAREHOLDERS AND RELEVANT GOVERNMENT AUTHORITIES
The Proposal is not subjected to approval from the shareholders of DCB.
8. DIRECTORS', MAJOR SHAREHOLDERS' AND PERSON CONNECTED TO DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS
None of the directors and major shareholders of DCB or persons connected to them have any interest direct and/or indirect in the Proposal.
9. SALIENT FEATURES OF AGREEMENT
9.1 Notwithstanding any other provisions of the JVA, RGBL and OMMCO agree that ROML will not do any of the matters as stipulated under the Reserve Matters in the JVA without the prior approval of RGBL and OMMCO, which approval will not be unreasonably withheld.
9.2 RGBL and OMMCO shall form a joint management amongst them in running of the Business.
9.3 RGBL and OMMCO shall bear the pre-operating cost and operation cost of the Business in accordance to their shareholding, however that the maximum amount of such costs shall be determined through the written agreement between RGBL and OMMCO.
9.4 RGBL and OMMCO shall co-operate with each other and collectively use their best endeavours to implement the Business and cause ROML to carry out the Business in a profitable manner.
9.5 RGBL and OMMCO jointly and severally undertake and shall not, at all material times, commit or cause to commit any act which is or will be detrimental to the Business.
9.6 the JVA shall terminate in accordance with provisions of the JVA.
10. ESTIMATED TIME FRAME FOR THE COMPLETION OF THE PROPOSAL
The Proposal is expected to be completed by end of April 2008.
11. DOCUMENTS FOR INSPECTION
The JVA can be inspected by all shareholders of DCB at the Registered Office of DCB at Suite 2-1, 2nd Floor, Menara Penang Garden, 42-A Jalan Sultan Ahmad Shah, 10050 Penang from Mondays to Fridays (except public holidays) during business hours for a period of two (2) weeks from the date of this announcement.
12. STATEMENT BY THE BOARD OF DIRECTORS
The Board of Directors having considered all aspects of the Proposal is of the opinion that the Proposal is in the best interest of the Group.
13. COMPLIANCE WITH THE SECURITIES COMMISSION'S POLICIES AND GUIDELINES
To the best of DCB's knowledge, the Proposal has not departed from the Securities Commission's Policies and Guidelines.
This announcement is dated 7 March 2008.