MACO will seek approval from the shareholders’ extraordinary meeting on 14 January 2020, for the following transactions:
            (1) Acquisition of 50 percent of the total shares of Hello LED, which possesses the ownership or the leasehold right over the billboard and LED digital advertising media, at the amount of 1.95 billion baht*;  

            (2) Private placement of 1,080 million newly issued shares to PLANB (accounting for 19.96 percent of the paid registered capital after the private placement), at 1.4381 baht per share, totaling 1,553.15 million baht. The remaining fundraising will be through a short-term loan. PLANB is considered a related party of MACO because both companies share the same major shareholder;

            (3) Contract with PLANB to allow PLANB to manage MACO’s entire advertising media in Thailand because MACO plans to change its business direction, from direct provider of advertising media services to owner of advertising media. According to the new direction, MACO will only build, procure, install and maintain advertising media on the condition that PLANB will guarantee MACO a minimum return.**    

The three transactions above are interrelated; thus, if any of them is not approved at the shareholders’ meeting, the others that have already been approved will be voided and any other related matters will not be considered at any sessions of other agenda items.
 
The IFA is of the opinion that the three transactions above are inappropriate and thus should not be approved by MACO shareholders because more than 50 percent of Hello LED advertising billboards is operated without permit under the Building Control Act B.E. 2522 (1979). In addition, Hello LED executives are unable to confirm the exact number of billboards having proper permit. This circumstance raises a major risk to Hello LED due to the inability to assess value and may cause a material impact on Hello LED business operation and its fair value. So far, there has not been a guideline for solving these issues in a tangible way. Moreover, there may be uncertainty regarding the conditions of related contracts under current negotiation. In addition, the IFA views that the offer price of the private placement to PLANB is lower than the fair value estimated by IFA at 1.4768-1.9120 baht per share based on the-sum-of-the-part calculation of the total value of each business unit, and that the three transactions would reduce the share value of MACO to 1.4499-1.8834 baht per share, excluding the impact on the fair value of Hello LED due to the risk related to the advertising billboards without permit.   

However, the Board of Directors and the Audit Committee of MACO views that the three transactions are appropriate and for the company’s interest thanks to the opportunity to obtain ownership of advertising billboards in the locations efficiently accessible to target clients. In addition, MACO has laid out preventive risk management measures and the seller will be responsible for compensation of damage for one year, at the total amount of 1.75 billion baht, or in case of failure to claim for damages from the seller, MACO Board of Directors views that Hello Bangkok Holding Company Limited, the major shareholder of Hello LED, can take care of the compensation payment instead. If Hello LED is no longer able to operate its entire business, the maximum damage amount to MACO will be 1.95 million baht. Regarding the PP offer price of 1.4381 baht per share, it is derived from the negotiation with reference to the weighted average price during the consecutive seven business days prior to the date where the Board of Directors resolved to propose the above transactions to the shareholders’ meeting. The Board of Directors thus views that such offer price is not low and already appropriate.

In this regard, the transactions above are deemed acquisition of assets and related party transactions;  therefore, they are subject to approval of the shareholders’ meeting, which requires at least three fourths of the total voting shares of the attending shareholders, excluding those with a conflict of interest.  

The SEC advises MACO shareholders to study the information in detail and exercise their voting right to protect their own interest and inquire the company’s executives to obtain complete information for decision making. 

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* MACO plans to acquire Hello LED shares from the existing shareholder, i.e., Win Harvest International Limited Co., Ltd.

** PLANB guarantees a minimum return to MACO during the first year at the amount of 350 million baht, and 700 million baht annually for the next four years, resulting in the total amount of 3.15 billion baht under the five-year contract.