DBS to acquire further 54% stake in island-wide network of AXS stations
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Move will allow DBS to expand suite of electronic services to corporate and retail customers
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Transaction done through purchase of Primefield Company
SINGAPORE, 9 JUNE 2006 - DBS Bank (DBS) announced today that it has entered into a sale and purchase agreement with LKN-Primefield Limited (LKNP) to purchase all the ordinary shares in Primefield Company Pte Ltd (Primefield) from LKNP for a cash consideration of $1.00.
Primefield is a Singapore incorporated company with an issued and fully paid-up capital of $8.10 million as at 31 December 2005. Its principal assets comprise (i) a 53.96% equity stake in AXS InfoComm Pte Ltd (AXS), a Singapore incorporated company; and (ii) a leasehold property known as Primefield-Landmark Building at 27 International Business Park. The building is recorded in Primefield's balance sheet at a carrying value of $13.71 million.
DBS has an existing 10.81% stake in AXS. Network for Electronic Transfers (Singapore) Pte Ltd, in which DBS holds a one third stake, has a 9.52% stake in AXS.
AXS primarily develops and operates an island-wide network of 360 web-enabled transactional terminals known as "AXS Stations". These public access stations offer bill and fine payment services as the core business, and processes some 8.4 million transactions a year. In addition they provide other e-services such as telecom prepaid card top-ups, HDB car park booking and cinema ticket booking.
The book value of Primefield's assets amount to $21.26 million as at 31 December 2005, while its total liabilities amount to $22.74 million, consisting mainly of bank borrowings, amount owing to LKNP and loans from certain directors. As a result, based on its audited financial statements as at 31 December 2005, the company has a negative net worth of $1.48 million.
With the acquisition, DBS shall assume responsibility to pay or procure the payment of all inter-company balances owing by Primefield and AXS to LKNP amounting to an aggregate sum of approximately $5.1 million (as at 30 April 2006), together with all accrued interest. DBS shall also procure the discharge of all existing personal guarantees granted by various directors of Primefield to secure existing loans owing by Primefield to DBS and United Overseas Bank Ltd amounting to an aggregate principal sum of approximately $18.8 million (as at 30 April 2006), together with all accrued interest. In addition, DBS will pay or procure the payment of loans owing by Primefield to certain of its directors amounting to an aggregate amount of about $0.7 million (as at 30 April 2006), together with all accrued interest.
For assuming these obligations, DBS will, through its 100% stake in Primefield, own a 53.96% stake in AXS and the Primefield-Landmark Building.
The terms and conditions of the acquisition were agreed between LKNP and DBS on arm's length commercial terms, based on among other things, the financial position of Primefield and AXS, and the value of the AXS business.
The acquisition allows DBS to expand its suite of electronic collection services and offer differentiated services to its corporate customers. AXS has the capability to provide customised electronic services to complement DBS' payment and collection services for corporate and government clients. The network is also a useful channel for DBS to provide information delivery services such as bill presentment by corporate and government entities such as the telcos, town councils and other financial institutions.
DBS also aims to leverage AXS as a platform to provide retail cash management and remittance services in some of its key overseas markets.
"This majority stake in AXS will strengthen our payments and collections business. The AXS stations will be positioned as a complementary channel to our Internet Banking platform and the ATM network", said Rajan Raju, Managing Director and Head of Global Transactions Services at DBS (and also Head of Technology & Operations and South & Southeast Asia), adding that: "DBS will also bring to AXS a large consumer base and our corporate relationships that will generate higher transaction volumes for this channel."
He noted that in the electronic bill payment market, there is an increasing trend for consumers to use electronic channels to pay their bills at a location and a time of their choice. AXS stations are equipped with debit card (NETS) and stored value card (CashCard) payment facilities. Running on a high-speed ADSL broadband network, AXS stations operate 24/7 and are installed at strategic and high traffic locations. AXS has today developed into a leading public broadband transactional terminal network in Singapore.
"We are delighted that DBS sees the strategic value of AXS. We have remained focussed on designing a business platform that provides an 'access service' linking corporate entities with the retail consumer and we have many ideas to expand this platform and our business. Going forward, with DBS' product innovation capabilities, strong marketing skills and extensive customer base, we are confident that we can take the AXS franchise to a higher level," said Joey Chang, CEO of AXS InfoComm Pte Ltd.
The completion of the acquisition is subject to various conditions precedent, namely approval by the shareholders of LKNP at a general meeting if required, and the approval from the Monetary Authority of Singapore being obtained by DBS. Given the transaction size, the transaction is not material in the context of the DBS Group operations.
About DBS
Headquartered in Singapore, DBS is one of the largest financial services groups in Asia with almost five million customers and operations in 14 markets. The largest bank in Singapore and the fifth largest banking group in Hong Kong as measured by assets, DBS' "AA-" and "Aa2" credit ratings are among the highest in the Asia-Pacific region. DBS has leading positions in consumer banking, treasury and markets, asset management, securities brokerage, equity and debt fund raising. Beyond the anchor markets of Singapore and Hong Kong, DBS serves corporate, institutional and retail customers through its operations in China, India, Indonesia, Malaysia, Thailand and The Philippines. More information about DBS Group Holdings and DBS Bank can be obtained from our website, www.dbs.com.
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