Further re proposed disposal

24 February 2012

RedHot Media International Limited

('RedHot' or the 'Company')

Further re proposed disposal and proposed restructuring of inter-company loans

Further re proposed disposal

On 16 November 2010 the Company announced that they had entered into a conditional Sale of Shares Agreement ("SSA") with PUC Founder (MSC) Berhad ("Founder") for the proposed disposal of the entire issued share capital of RedHot Media Group Sdn Bhd ("RMG"), Red Media Asia Limited ("Red Media") and Ausscar Group Sdn Bhd ("Ausscar"), all of which are wholly owned operating subsidiaries of RedHot, (the "Proposed Disposal") to Founder. The total consideration payable on the Proposed Disposal is RM95,000,000 to be satisfied through the issuance of a total of 950,000,000 new ordinary shares in Founder at an issue price of RM0.10 per share (the "Consideration Shares").

All definitions used herein shall have the same meanings as the words and expressions defined in the announcement dated 16 November 2010, except where the context otherwise requires or where otherwise defined herein.

On 23 February 2012 RedHot and Founder entered into a supplementary Sale of Shares Agreement (the "Supplemental SSA") in order to vary and amend some of the terms of the SSA following on from the due diligence exercise undertaken pursuant to the Proposed Disposal. The salient terms of the Supplemental SSA in relation to the Proposed Disposal are as follows:

(i) Founder and RedHot agree that the RH Media RCCPS A and RMG RCPS shall be cancelled by way of capital reduction exercises to be undertaken by RH Media and RMG respectively ("Proposed Capital Reduction Exercises") upon the RH Media RCCPS A and RMG RCPS having been transferred and registered in the name of RedHot upon the completion of the following agreements simultaneously with the completion of the SSA:-

a. shares sale agreement entered into between Kumpulan Modal Perdana Sdn Bhd ("KMP") and RedHot dated 23 December 2011 for the disposal of the RH Media RCCPS A held by KMP to RedHot for a purchase consideration of RM10,493,820 ("RH Media RCCPS A Acquisition Agreement");

b. shares sale agreement entered into between Flaming Eagle Group Ltd, Lu Kim Yen, Lye Hun Kwee, Liew Soon Fong (hereinafter collectively known as the "RMG RCPS Holders") and RedHot dated 23 December 2011 for the disposal of the RMG RCPS held by the RMG RCPS Holders to RedHot for a purchase consideration of RM4,000,000 ("RMG RCPS Acquisition Agreement")

(ii) RedHot irrevocably undertakes and warrants to Founder that:-

a. RedHot shall fulfill all its obligations under the RH Media RCCPS A Acquisition Agreement and RMG RCPS Acquisition Agreement and complete the RH Media RCCPS A Acquisition Agreement and RMG RCPS Acquisition Agreement simultaneously with the SSA; and

b. RedHot shall render all assistance to Founder to complete the Proposed Capital Reduction Exercises within a period of four (4) months from the Completion Date or such other date as may be agreeable by the parties ("Targeted Date"). In the event the Proposed Capital Reduction Exercises are not completed by the Targeted Date, RedHot shall indemnify and keep indemnified Founder for all losses, costs and expenses as may be incurred by Founder as a result of the breach of the undertaking by RedHot.

Save for the above all other salient terms of the SSA remain unchanged.

Proposed restructuring of inter company loans

As at 31 December 2011 RedHot had an outstanding inter-company amount due to Red Media totalling RM 21,806,942, which has occurred as a result of certain expenses that have been paid on behalf of RedHot by its subsidiaries, and the internal restructuring of RedHot's subsidiaries in February 2009. In advance of completing the Proposed Disposal it is RedHot's intention to settle this inter-company amount due through the declaration and payment of a dividend by Red Media to RedHot (the "Proposed Dividend"). The Proposed Dividend is to be apportioned as follows:

·; proposed declaration and payment by Red Media of an interim dividend to RedHot of RM 4,879,193 for the financial year ending 31 December 2011 ; and

·; proposed declaration and payment by Red Media of an interim dividend to RedHot of RM 16,953,127 for the financial year ending 31 December 2012

The outstanding amount comprises::-

(a) Pre-listing expenditure of RM4.49 million incurred by RedHot in 2008 for the listing of RedHot on the AIM Market paid on behalf by the existing subsidiaries;

(b) Professional fees of RM3.19 million incurred by RedHot since 2008 including audit fee, secretarial fee and brokerage fee paid on behalf by the existing subsidiaries;

(c) Amount of RM12.63 million incurred on the acquisition of RedHot Media Sdn Bhd and EPP Solution Sdn Bhd by RedHot pursuant to the internal reorganisation implemented in 2009; and

(d) Amount of RM1.50 million incurred for the acquisition of Ausscar by RedHot pursuant to the internal reorganisation implemented in 2009.

The settlement of the amount owed by RedHot to Red Media will not be paid in cash but the Proposed Dividend shall be set off against the amount owing by RedHot to Red Media amounting to approximately RM21,806,942. The Board have taken advice and believe that there are no tax implications for RedHot on the payment of the Proposed Dividend. The payment of the Proposed Dividend is expected to be effected before the publication of RedHot's financial statements for the year ending 31 December 2011.

The Board of RedHot expect the Proposed Disposal to be completed by the end of June 2012, subject to the necessary regulatory approvals being obtained.

A full copy of an announcement released by Founder at 5.00 p.m. Malaysian time (9.00am UK time) on 24 February 2012 in relation to the Supplemental SSA and the Proposed Dividend is available from www.bursamalaysia.com and can be found here:

http://www.rns-pdf.londonstockexchange.com/rns/0704Y_-2012-2-24.pdf

Notes to Editors:

RedHot is a one-stop centre comprising media and advertising businesses and marketing and distribution channels in both Malaysia and China, creating a large network of clientele and business affiliates. RedHot operates in four defined market segments, namely Media, Advertising, Merchandising and Insurance Product & Financial Advisory. RedHot's ecosystem comprises of media brokerage (media owners including newspapers, television, radio, billboards, websites and social media), disposal channels (retail outlets, wholesaler, banks, insurance companies, agency networks, consumers and corporate clientele), content distribution (internet users and content users) and media infrastructure (reach to brand owners and advertisers, internet users for mobile and PC, and target market for consumers and end-user). 

PUC FOUNDER (MSC) BERHAD ("PUCF" OR THE "COMPANY")

(I) PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN Red Media Asia Limited ("RMA") COMPRISING A TOTAL OF 8,269,818 ORDINARY SHARES OF USD1.00 each FROM redHOT media international limited ("RMIL" or the "vendor") FOR A TOTAL CONSIDERATION OF rM95.0 MILLION TO BE SATISFIED VIA THE ISSUANCE OF 950,000,000 NEW ORDINARY SHARES OF RM0.10 EACH IN PUCF ("SHARES") AT AN ISSUE PRICE OF rm0.10 EACH("PROPOSED ACQUISITION");

(II) PROPOSED EXEMPTION UNDER PRACTICE NOTE 9 OF THE MALAYSIAN CODE ON TAKE-OVERS AND MERGERS2010 ("CODE") TO RMIL AND PERSONS ACTING IN CONCERT WITH IT FROM THE OBLIGATION TO UNDERTAKE A MANDATORY TAKE-OVER OFFER FOR THE REMAINING PUCF SHARES NOT ALREADY HELD BY IT UPON COMPLETION OF THE PROPOSED ACQUISITION ("PROPOSED EXEMPTION");

(III) PROPOSED INCREASE IN AUTHORISED SHARE CAPITAL OF pucf ("proposed IASC"); and

(IV) proposed amendment to the company's meMorandum and articles of association ("proposed Amendment");

(HEREINAFTER COLLECTIVELY REFERRED TO AS THE "PROPOSALS").

All definitions used herein shall have the same meanings as the words and expressions defined in the announcement dated 16 November 2010 ("Announcement"), except where the context otherwise requires or where otherwise defined herein.

1. INTRODUCTION

Kenanga Investment Bank Berhad, on behalf of the Board of Directors of PUCF, had on 16 November 2010 announced that the Company had on even date entered into a conditional Sale of Shares Agreement with RMIL for the acquisition of the entire equity interest in RMA, a wholly-owned subsidiary of RMIL, comprising a total of 8,269,818ordinary shares of USD1.00 each at completion of the SSA for a total consideration of RM95,000,000 to be satisfied via the issuance of 950,000,000 new Shares in PUCF at an issue price of RM0.10 each.

Subsequently, on 28 March 2011, KIBB, on behalf of the Board, had announced that, pursuant to Section 16.5 of Practice Note 9 of the Code, the Board had appointed TA Securities Holdings Berhad as the Independent Adviser to advise and make recommendation in relation to the Proposed Exemption for the consideration of the shareholders at an Extraordinary General Meeting.

KIBB, on behalf of the Board, had on 13 May 2011 and 11 November 2011 announced the extension of time of the SSA's conditional period for a period of six (6) months up to 14 November 2011 and 15 May 2012 respectively. In addition, the parties of the SSA have also agreed that in the event the conditions precedent are not fulfilled by 15 May 2012, the conditional period will be extended automatically for another six (6) months up to 14 November 2012.

Further to the above, KIBB, on behalf of the Board, wishes to announce that PUCF had on 23 February 2012entered into the First Supplemental Sale of Shares Agreement with RMIL in relation to the Proposed Acquisition ("Supplemental SSA").

The Supplemental SSA is entered into to vary and amend some of the terms of the SSA, further details of which are set out in Section 2 of this announcement.

The SSA shall hereinafter include the Supplemental SSA.

Save as disclosed in this announcement, all other terms of the Proposals remain unchanged.

2. SALIENT TERMS OF THE SUPPLEMENTAL SSA

The salient terms of the Supplemental SSA in relation to the Proposed Acquisition are as follows:-

2.1 Clause 9 of Schedule 3 to the SSA

Clause 9 of Schedule 3 to the SSA shall be deleted and replaced with the New Clause 7A - Cancellation of Preference Shares as detailed in Section 2.2 of this announcement.

2.2 New Clause 7A - Cancellation of Preference Shares

(i) PUCF and RMILagree that the RH Media RCCPS A and RMG RCPS shall be cancelled by way of capital reduction exercises to be undertaken by RH Media and RMG respectively ("Proposed Capital Reduction Exercises") upon the RH Media RCCPS A and RMG RCPS having been transferred and registered in the name of RMIL upon the completion of the following agreements simultaneously with the completion of the SSA:-

(a) shares sale agreement entered into between Kumpulan Modal Perdana Sdn Bhd ("KMP") and RMIL dated 23 December 2011 for the disposal of the RH Media RCCPS A to RMIL for a purchase consideration of RM10,493,820 ("RH Media RCCPS A Acquisition Agreement"); and

(b) shares sale agreement entered into between Flaming Eagle Group Ltd, Lu Kim Yen, Lye Hun Kwee, Liew Soon Fong (hereinafter collectively known as the "RMG RCPS Holders") and RMIL dated 23 December 2011 for the disposal of the RMG RCPS to RMIL for a purchase consideration of RM4,000,000 ("RMG RCPS Acquisition Agreement").

(ii) RMIL irrevocably undertakes and warrants to PUCF that:-

(a) RMIL shall fulfil all its obligations under the RH Media RCCPS A Acquisition Agreementand RMG RCPSAcquisition Agreement and complete the RH Media RCCPS A Acquisition Agreement and RMG RCPSAcquisition Agreementsimultaneously with the SSA; and

(b) RMIL shall render all assistance to PUCF to complete the Proposed Capital Reduction Exercises within a period of four (4) months from the Completion Date or such other date as may be agreeable by the parties ("Targeted Date"). In the event the Proposed Capital Reduction Exercises are not completed by the Targeted Date, RMIL shall indemnify and keep indemnified PUCF for all losses, costs and expenses as may be incurred by PUCF as a result of the breach of the undertaking by RMIL.

(iii) The costs and expenses including legal fees for the Proposed Capital Reduction Exercises shall be borne by RMIL.

Save for the above, all other salient terms of the SSA remain unchanged.

3. EFFECTS OF THE PROPOSALS

The Proposed IASC, the Proposed Amendment and the Proposed Exemption will not have any effects on the share capital, substantial shareholders' shareholdings, earnings, NA and gearing of the PUCF Group. The effects of the Proposed Acquisition based on the audited consolidated financial statements of PUCF for FYE 2010 are set out in the ensuing paragraphs.

3.1 Share Capital

As at 18 January 2012, being the latest practicable date prior to this announcement ("LPD"), all the 11,824,000 outstanding ESOS options of PUCF (as disclosed in the Announcement) have been fully exercised and as such, there are no outstanding ESOS options of PUCF which have been granted but not exercised.

The effects of the Proposed Acquisition on the issued and paid-up share capital of PUCF are as set out below:-

The issuance of theConsideration of Shares represents approximately 90.91% of PUCF's enlarged issued and paid-up share capital.

3.2 Substantial Shareholders' Shareholdings

The effects of the Proposed Acquisition on the substantial shareholders' shareholdings of PUCF are as set out below:-

Notes:-

(a) As at LPD, all the 11,824,000 outstanding ESOS options of PUCF (as disclosed in the Announcement) have been fully exercised and save for the aforementioned, there are no outstanding ESOS options of PUCF which have been granted but not exercised.

(b) Deemed interested by virtue of the shareholdings held by his spouse.

(c) Negligible.

(d) Deemed interested by virtue of being the holding company of PUC Founder (M) Sdn Bhd.

(e) Deemed interested by virtue of being the holding company of Founder (Hong Kong) Limited.

(f) Deemed interested by virtue of having substantial interest in Founder Holdings Limited.

(g) RMIL's shareholdings computed based on the Consideration Shares and after deducting the following:-

(i) 123,950,560 Shares to be allotted pursuant to the RH Media RCCPS A Acquisition Agreement and RMG RCPS Acquisition Agreement by RMIL, i.e. allotment of 83,950,560 Consideration Shares to KMP and 40,000,000 Consideration Shares to the RMG RCPS Holders ("Proposed Settlement"), subject to the completion of the Proposed Acquisition;

(ii) 80,000,000 Shares pursuant to the Vendor Offer for Sale to satisfy the Public Spread Requirement as detailed in Section 8 of the Announcement; and

(iii) 95,000,000 Shares for the proposed settlement to three (3) parties for introducing the Proposed Acquisition (as announced by RMIL on 16 November 2010).

(h) The number of PUCF Shares equivalent to the value of the purchase considerationpursuant to the RH Media RCCPS A Acquisition Agreement of RM10,493,820 will bedeterminedbased on the 5-market day volume weighted average share price of PUCFShare preceding the completion date of the RH Media RCCPS A Acquisition Agreement. For illustrative purposes, based on the 5-market day volume weighted average share price of PUCF from 12 January 2012 to 18 January 2012 of RM0.125 per PUCF Share, the number of PUCF Shares which is equivalent to the value of the said purchase consideration is 83,950,560 Shares.

(i) Deemed interested by virtue of his substantial shareholdings in RMIL by applying Section 6A of the Act.

3.3 Earnings

As the Proposed Acquisition is expected to be completed by the second quarter of 2012 subject to the necessary approvals being obtained, the Proposed Acquisition is not expected to have a material effect on the earnings and the EPS of the enlarged PUCF Group for the FYE 2011.

The Proposed Acquisition is, however, expected to contribute positively to the earnings and EPS of the enlarged PUCF Group, and to improve the future financial position of the enlarged PUCF Group.

3.4 NA and Gearing

The proforma effects of the Proposed Acquisition on the NA and NA per Share and gearing of the PUCF Group based on its audited consolidated financial statements for the FYE 2010 are as set out below:-

Notes:-

(a) Adjusted for 11,824,000 new Shares issued between 1 January 2011 to the LPD pursuant to the exercise of ESOS options at the exercise price of RM0.10 per Share.

(b) The Proposed Acquisition taken into consideration of the following:-

(i) The proposed declaration and payment of dividends to RMIL amounting to RM21.83 million by RMA as set out below, prior to the completion of the Proposed Acquisition:-

§ proposed declaration and payment of final dividend to RMIL of RM4.88 million for FYE 2011; and

§ proposed declaration and payment of interim dividend to RMIL of RM16.95 million for FYE 2012;

(hereinafter collectively known as the "Proposed Dividends");

(ii) The settlement of the amount owing by RMIL to the RMA Group, whereby the whole of the Proposed Dividends that are due to be paid to and received by RMIL will not be paid in cash but the Proposed Dividends shall be set off against the amount owing by RMIL to the RMA Group amounting to approximately RM21.81 million as at 31 December 2011;

(iii) The Proposed Settlement as detailed in Section 3.2, note (g) of this announcement; and

(iv) The Proposed Capital Reduction Exercises as detailed in Section 2.2 of this announcement.

(c) Including the estimated expenses of RM1,500,000pursuant to the Proposed Acquisition.

(d) Comprising ofbank borrowings of RM2.31 million and convertible securities of RM0.60million.

As illustrated above, the Proposed Acquisition is not expected to have any material effect on the NA and NA per Share of the PUCF Group. Premised on the above and taking into account the total borrowings of the RMA Group, the gearing level of the PUCF Group will be increased to approximately 0.05 times.

Nonetheless, future earnings from the Proposed Acquisition may contribute positively to the future NA and NA per Share of the enlarged PUCF Group.

4. DOCUMENTS FOR INSPECTION

The Supplemental SSA will be made available for inspection at the Registered Office of PUCF at Level 15-2, Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpurfrom Monday to Friday (except public holidays) during business hours for period of three (3) months from the date of this announcement.

This announcement is dated 23 February 2012.