Bangkok, 18 August 2020 – SEC is advising the shareholders of Wow Factor Public Company Limited (W) to study information and exercise the voting right regarding the subsidiary’s acquisition of DOMINO’S PIZZA business in Thailand at the total value of 426 million baht, at the extraordinary shareholders’ meeting to be held on 24 August 2020. In this regard, the independent financial advisor (IFA) views that W’s shareholders should not approve the acquisition because the acquisition value is deemed inappropriate while the payment conditions and the interest calculation are deemed unfair.
W’s Board of Directors has resolved to approve Domino Asia Pacific Company Limited, subsidiary of the company, to enter into transactions for the acquisition of DOMINO’S PIZZA business in Thailand with Dominos (Thailand) Company Limited and FC Commissary Company Limited, and to enter into the Master Franchise Agreement with Domino’s Pizza International Franchising Inc. as a transferee with the exclusive right to open, administer and develop the pizza restaurant business under the tradename DOMINO’S PIZZA, at the total value of 400 million baht with an interest rate of 10 percent per annum (but not exceeding 26.6 million baht), plus an investment fund for opening new branches at an approximate value of 351 million baht. The total transaction value is approximately 777.6 million baht.
W has made a deposit to Domino’s (Thailand) in the form of a loan of 100 million baht without interest. After the business acquisition agreement is signed, W will make an additional deposit of 40 million baht. However, if the business acquisition transaction is not executed, the loan money will be due for repayment to W within 31 December 2020.
W’s Board of Directors and the Audit Committee view that the aforesaid investment complies with the company’s investment policy framework as laid out by the Board, and that it has been considered carefully and reasonably. Despite exposure to several risk factors, the investment is manageable. In addition, if the business operation is proceeded according to the proposed business plan, the operating results will be significantly improved. W will seek an approval for the business acquisition transactions at the extraordinary shareholders’ meeting to be held on 24 August 2020.
In this regard, however, IFA is of the opinion that W shareholders should not approve the company’s acquisition transactions of DOMINO’S PIZZA business because the total value is inappropriate. The fair value for the acquisition as assessed by IFA is between 139.58 – 344.92 million baht, which is lower than 400 million baht to be paid by the company. Besides, the payment conditions and the interest calculation are considered unfair because W made a deposit in the form of a 100-million-baht loan without interest while the transferrer set an interest rate of 10 percent per annum of the acquisition value, which is higher than W’s average loan cost of 6.92 percent per annum during 2018-2019. In addition, if the acquisition is not executed, W may have to wait until 31 December 2020 to take the money back even though any acquiring party can normally demand a prompt return of deposit. Besides, once the business acquisition agreement is signed, W has to pay an additional deposit of 40 million baht, resulting in the total deposit of 140 million baht or 32.8 percent of the acquisition value. This is deemed a significantly high amount of deposit before execution of transactions.
SEC therefore urges W’s shareholders to study information on this matter carefully and exercise the voting right to protect their own interest as well as make inquiries to W’s management to gather complete information before voting at the extraordinary shareholders’ meeting. In any case, the aforesaid acquisition transactions have to be approved by the shareholders’ meeting with at least three fourths of the total votes of the attending shareholders with the voting right.
_____________________