Entry into Non-Binding Memorandum of Understanding In Relation To the Proposed Divestment of the Company�s Shares In Spackman Media Group Limited To Spackman Equities Group Inc

SINGAPORE -�Media OutReach - 18 August 2020 – The Board of
Directors (“Board“) of Spackman Entertainment Group Limited (“Company“ and together with its
subsidiaries, the “Group“) wishes to inform shareholders that the
Company has today entered into a non-binding memorandum of understanding (“MOU“)
with Spackman Equities Group Inc (“SQG” or the “Purchaser“), a
company listed on the TSX Venture Exchange in Canada, pursuant to which the
Company intends to sell the its entire interest in Spackman Media Group Limited
(“Spackman Media Group“) (the “Proposed Divestment“) to the
Purchaser.

 

The Purchaser is an investment company
that selectively invests into growth companies that possess proprietary
know-how or technologies.  The common
shares of SQG are traded on the TSX Venture Exchange under the symbol ‘SQG’. As
of the date of this announcement, SQG is a substantial shareholder of the Company,
holding 7.55% of the total issued shares of the Company. Richard Lee, the Non-Executive
Director of the Company, and Na Kyoungwon, the Executive Director, President
and Chief Operating Officer of the Company, are also directors of SQG.

 

Under the MOU,
the Company intends to sell all its 13,968,038 common voting shares of Spackman
Media Group (“Sale Shares“), representing 43.88% of the Company’s interest in Spackman Media Group. The purchase
consideration will be fully satisfied by newly issued common shares of the
Purchaser (“Consideration“). Accordingly, following the completion of
the Proposed Divestment, SQG will be a subsidiary of the Company.

 

The Company envisage the Proposed
Divestment to be classified as a major transaction under Chapter 10 of the
Catalist Rules and may also constitute an interested person transaction under
Chapter 9 of the Catalist Rules. The Company will, through its Sponsor, consult
the SGX-ST on the applicability of Chapter 9 of the Catalist Rules, and if
necessary, on the applicability of Chapter 10 of the Catalist Rules.

 

The Parties further acknowledge and
understand that the Proposed Divestment
may constitute a reverse-takeover for SQG pursuant to the relevant regulations
of the TSX Venture Exchange.

 

The MOU does not constitute any legally
binding obligations on the Company and the Purchaser (collectively, the “Parties“).
It is intended to be a basis for further negotiations between the Parties.

Rationale

 

Upon the
completion of the Proposed Divestment, the Parties plans to develop, produce
and finance motion pictures and entertainment content targeted for the North
American market, as well as develop other entertainment-related businesses in
North America.

 

The rationale mentioned above is in line
with the Group’s strategy to diversify into the production and financing of US Hollywood
movies, a major initiative that the Group plans to unveil in the near future.

Consideration

 

The Consideration
for the Proposed Divestment is as follows:

 

(1) The price
per share of the Sale Shares shall be no less than KRW 2,000 (equivalent to S$2.30)
which is equivalent to the most recent significant transaction of the shares of
Spackman Media Group that has been documented in public records. Accordingly, the
Consideration shall be no less than KRW 27,936,076,000 (equivalent to S$32,126,487).

 

(2) The issue
price of the shares of the Purchaser to satisfy the Consideration will be discussed
and agreed upon by the Parties, in accordance with TSX Venture Exchange regulations.

 

The Consideration
shall be further negotiated and agreed upon between the Purchaser and the Company.

 

Conditions Precedent

 

The key
conditions precedent to the Proposed Divestment include, but not limited to,
the following:

 

(a) Completion
of the respective Parties’ due diligence exercise;

 

(b) The
Purchaser shall not own any shares in the Company prior to or at the time of
the execution of the Proposed Divestment;

 

(c) The Purchaser
shall consolidate its common shares on a 10:1 basis;

 

(d) Completion
of independent valuation on Spackman Media Group commissioned by each of the Company
and Purchaser, if required;

 

(e) Receipt of
approval from the shareholders of the Company in relation to the Proposed Divestment,
if needed;

 

(f) Receipt of
approval from the shareholders of the Purchaser in relation to the acquisition
of the Sale Shares and the issuance of its common shares, if needed; ?

 

(g) All other
necessary approvals and consents from all relevant government, regulatory and
other authorities and third parties in Singapore, Canada, and other relevant
jurisdictions to effect and complete the Proposed Divestment being obtained,
and where such approvals or consents are subject to conditions pertaining to
and are to be complied with by the Purchaser, such conditions being reasonably
acceptable to the Purchaser.

Further Information

 

Negotiations between
the Parties are ongoing, and no binding agreement has been entered into between
the Parties in respect of the Proposed Divestment. Pursuant
to the MOU, the Parties agree that the MOU shall terminate if definitive
agreement(s) are not executed by 30 September 2020, unless extended mutually.

 

The Company shall
make the necessary announcements as and when there are further material
developments on the Proposed Divestment.

 

Caution in Trading

 

Shareholders and
potential investors should exercise caution when trading in the shares of the Company.
The Proposed Divestment is subject to
the execution of definitive agreement(s) by the Parties and conditions
precedent to be fulfilled, and there is no certainty or assurance that the definitive
agreement will be entered into, or that the Proposed Divestment will
be completed.

 

 

BY ORDER OF THE BOARD

Na
Kyoungwon

Chief
Operating Officer, President and Executive Director

18
August 2020