Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim any liability
whatsoever for any loss howsoever arising from or in reliance upon the whole or any
part of the contents of this announcement.

(Incorporated in Japan with limited liability)(Stock Code: 1245)

DISCLOSEABLE TRANSACTION IN RELATION TO
THE ACQUISITION OF ALL ISSUED SHARES IN
DREAM GAMES SINGAPORE PTE. LTD
THE ACQUISITION
The Board is pleased to announce that on 31 October 2017 (after trading hours), theCompany and the Vendors entered into the Agreement pursuant to which theCompany has agreed to purchase and each of the Vendors has agreed to sell theSale Shares at the Consideration, which will be settled by cash subject to certain
condition precedents for the Completion as mentioned below. Immediately after
completion of the Acquisition, the Target Company and its subsidiaries will become
wholly-owned subsidiaries of the Company and will be consolidated as such in theGroup’s financial statements.
LISTING RULES IMPLICATIONAs the largest of the percentage ratios under Rule 14.07 of the Listing Rules inrespect of the Acquisition is more than 5% but less than 25%, the Acquisition
constitutes a discloseable transaction of the Company which is subject to thereporting and announcement requirements but exempt from the Shareholders’approval requirement set out in Chapter 14 of the Listing Rules. For the avoidance ofdoubt, the consideration ratio of the Acquisition was calculated based on theDirectors’ estimated amount of the Consideration, which is in turn subject to thedebt and cash positions of the Target Group as at the Cut-off Date and theCompletion Date, as further described in “Consideration” below. The Directors are ofthe view that it is unlikely that the final amount of the Consideration will render theconsideration ratio of the Acquisition being higher than 25%.

–1–

Shareholders and potential investors should note that the Completion of theAcquisition is subject to satisfaction (or, if applicable, waiver) of certain
conditions precedent. There is no assurance that the Completion contemplated
under the Agreement will take place. Shareholders and potential investors areadvised to exercise caution in dealing in the Shares.
THE ACQUISITION
The Board is pleased to announce that on 31 October 2017 (after trading hours), theCompany and the Vendors entered into the Agreement pursuant to which the Company
has agreed to purchase and each of the Vendors has agreed to sell the Sale Shares atthe Consideration, which will be satisfied by cash. The principal terms and conditions ofthe Agreement are set out below:
THE AGREEMENT
Date
31 October 2017Parties(1) Purchaser:

The Company(2) Vendors:

The Vendors

To the best of the Directors’ knowledge, information and belief, having made allreasonable enquiries, each of the Vendors is an independent third party of, and has noconnection or relationship that might cause conflict of interests with, the Company andits core connected persons and the respective close associates as at the date of thisannouncement.
Subject Matter
Pursuant to the Agreement and subject to the conditions precedent thereto as set out
below, the Company has agreed to purchase and each of the Vendors has agreed tosell the Sale Shares.

–2–

Consideration
The Consideration, which is payable on the Completion Date in cash, is calculated withthe formula below:
Consideration = b – (d – c)
b:
d:
c:

being the base value of the Consideration, which is agreed to be JPY2.1 billion
being the aggregate value of the total loans and borrowings, finance lease liabilities
and the finance-related liabilities (if any) of the Target Group as at the Cut-off Date(currently expected to be 31 October 2017) (the “Debt”)
being the cash and cash equivalents of the Target Group as at the Cut-off Date(currently expected to be 31 October 2017) (the “Cash”)

Based on the consolidated unaudited management accounts of the Target Group as at30 September 2017 (being the latest month-end immediately preceding thisannouncement), the Directors estimate that the final Consideration will be approximately
JPY1.91 billion. If the Target Group’s Debt and Cash positions as at the Completion
Date are different from those as at the Cut-off Date by more than JPY1 million, theConsideration shall be re-calculated with the Debt and Cash positions as at theCompletion Date and any difference in monetary value shall be paid in cash after theCompletion Date.
The Directors currently expect to fund the Consideration with external bank borrowings
to be obtained from financial institutions in Japan before the Completion Date.
The calculation of Consideration was arrived at based on arm’s length negotiations
between the Company and the Vendors with reference to (i) the net asset value andcash and debt positions of the Target Group as at 30 September 2017, (ii) theprospects of the business of the Target Group, (iii) the financial position of the Target
Group and (iv) other factors set out in “Reasons for and Benefits of the Acquisition”
below. Taking into account the potential development opportunities of the Target Groupand that the Acquisition will allow the Company to expand its entertainment business inSoutheast Asia, the Consideration was determined at a premium to the net asset valueof the Target Group.
Conditions Precedent
Completion of the Acquisition is subject to fulfilment of the following conditions
precedent pursuant to the Agreement, amongst other things:(a) Representation and warranties by each of the Company and the Vendors in theAgreement are true and correct in all material respects.
(b) The Vendors have performed and complied with its obligations that are required tobe performed or complied with prior to the Completion under the Agreement.
(c) The Company has obtained its funding for the Acquisition with the amount andconditions satisfactory to the Company at its discretion.
–3–(d) The Company has paid the Consideration and provided funds to the Target Groupto repay a shareholder’s loan in the amount of JPY0.12 billion with an annualcompound interest of 1% DGJ owes to a Vendor via the Target Company.
(e) There has been no event that has or could be reasonably expected to have amaterial adverse effect on the assets, management, cash, business, properties,debt and future business plan or prospects of the Target Group, whichever causes,including, without limitation to, change, proposal to change and change ofinterpretation by the administrative agency of the Laws.
(f)Certain Vendors, who has agreed to continue to serve as directors of the Target
Group after the Completion has signed and delivered undertaking letters to theCompany and such undertaking letters remain in force.

(g) All outstanding convertible bonds issued by the Target Company have been
converted into ordinary shares of the Target Company in accordance with the terms
and conditions thereof and there is no indebtedness the Target Company owes toany bondholders in connection with the bond.
If any of the conditions set out above has not been satisfied on the Completion Date,either Party may have the following options, at its sole discretion, to :(a) waive the conditions then unsatisfied and proceed to the Completion on theCompletion Date;(b) suspend the Completion until the extended completion date the Vendors and theCompany mutually agree before the Long Stop Date; or(c) terminate the Agreement when the Long Stop Date has lapsed unless such failureof the Completion is not attributable to the terminating Party.
Specific Undertakings
Non-competition
For the benefit of the Target Group and the Company, each of the Vendors has agreed,
within the period of two years from the Completion Date or the resignation date fromthe Vendors (whichever is later), not to:(a) engage in or cause any third parties to engage in the same or similar kinds ofbusiness the Target Group is carrying on, or plans to carry on in the future (businessthe Target Group plans is limited to the case where the Target Group’s decision
making body has decided to launch such business and requisite work to achieve tolaunch such business has commenced) (the “Competing Business”);–4–

(b) (i) become an employee, director, officer, counselor or adviser of any companies
engaging in the Competing Business (the “Competitor”), (ii) own or acquire sharesor equity interests of the Competitor, or (iii) advance a loan or offer any funding tothe Competitor; and(c) recruit or solicit, or cause any third parties to recruit or solicit any employees,directors, officers, counselors or advisers of the Target Group to have them resign,retire, transfer and be independent from the Target Group except for their voluntary
application to general recruiting process without focusing on specific targets
through recruiting agents, recruiting magazines and websites.
Four of the Vendors, who will remain as the Target Group’s management, have further
undertaken to serve as directors of the Target Group for a period of at least five years
from the Completion Date.
Completion
Completion of the Acquisition shall take place on the Completion Date (i.e. 20November 2017), or on such other date as the Parties may mutually agree. Immediately
after the completion of the Acquisition and electronic registration for change ofshareholders at the relevant Singapore authority, the Target Company and its
subsidiaries will become wholly-owned subsidiaries of the Company and will beconsolidated as such into the Group’s financial statements.
INFORMATION OF THE GROUP
The Group operates pachinko halls in Japan, where customers can play pachinko andpachislot, which are recreational arcade games characterised by an element of chance.
As at the date of this announcement, the Group operates 55 pachinko halls primarily inthe north-eastern part of Japan.
INFORMATION OF THE VENDORS AND THE TARGET GROUP
Amongst the Vendors, Mr. Hisanori Watanabe is a co-founder of the Target Company in2013. Other Vendors are current management or employees of the Target Group (ortheir investment holding company), as well as an independent investor, of which four of
the Vendors have agreed to continue with their management duties within the Target
Group for at least 5 years.
The Target Group has its headquarter in Singapore and its operating bases in Vietnamand Cambodia. The Target Group principally engages in the operation of entertainment
and amusement facilities in Cambodia and Vietnam. As at the date of thisannouncement, the Target Group operates (i) 6 outlets of entertainment and amusement
facilities, in Cambodia and Vietnam, under the brands “Dream Games” providing arcade
games, bowling and karaoke activities.

–5–Shareholding and corporate structure of the Target GroupSet out below is the shareholding and corporate structure of the Target Group
immediately before the Completion Date:
The Vendors
100%

Target Company

100%DGJ

DGC

DGV

Set out below is the expected shareholding and corporate structure of the Target Group
immediately after the Completion Date:
The Company
100%

Target Company

100%

TheDGCVendor

TheDGJVendor–6–The
DGVVendor

FINANCIAL INFORMATION OF THE TARGET GROUP
Set out below is the consolidated financial information of the Target Group based on its
consolidated audited financial statements prepared in accordance with the Financial
Report Standards of Singapore:
For the years ended
31 December
2015
2016
US$’000
US$’000

Turnover
Net profit before taxation
Net profit after taxation

5,881
1,074849

9,314852513

As at 31 December
2015
2016
US$’000
US$’000
Cash (being cash and cash equivalent)
Debt (being loan and borrowings and finance lease liabilities)
Net assets

657
2,415
2,901

1,350
3,382
3,268

REASONS FOR AND BENEFITS OF THE ACQUISITIONThe Target Group is principally engaged in the operation of entertainment andamusement facilities in Cambodia and Vietnam.
The principal activities of the Group are pachinko and pachislot hall operations, hoteland restaurant operations. The Acquisition represents a strategic opportunity for theGroup to establish its leading presence in gaming and entertainment industry inSoutheast Asia and broaden the types of entertainment provided by the Group; and isin line with the overall business strategies and the expansion plan of the Group to
diversify income source and enhance Shareholders’ investment return.
The Directors (including the independent non-executive Directors) consider that theAcquisition is conducted under arm’s length negotiations between the Company andthe Vendors and the Acquisition is in the interests of the Company and the Shareholders
as a whole.

–7–LISTING RULES IMPLICATIONSAs the largest of the percentage ratios under Rule 14.07 of the Listing Rules in respectof the Acquisition is more than 5% but less than 25%, the Acquisition constitutes adiscloseable transaction of the Company which is subject to the reporting andannouncement requirements but exempt from the Shareholders’ approval requirement
set out in Chapter 14 of the Listing Rules. For the avoidance of doubt, the consideration
ratio of the Acquisition was calculated based on the Directors’ estimated amount of theConsideration, which is in turn subject to the debt and cash position of the Target
Group as at the Cut-off Date and the Completion Date, as further described in“Consideration” above. The Directors are of the view that it is unlikely that the final
amount of the Consideration will render the consideration ratio of the Acquisition being
higher than 25%.
Shareholders and potential investors should note that the completion of theAcquisition is subject to satisfaction (or, if applicable, waiver) of certain conditions
precedent. There is no assurance that the Completion contemplated under theAgreement will take place. Shareholders and potential investors are advised toexercise caution in dealing in the Shares.
DEFINITIONSIn this announcement, the following expressions shall have the meanings set out below
unless the context requires otherwise:“Acquisition”

the proposed acquisition of the Sale Shares by theCompany from the Vendors pursuant to the terms andconditions of the Agreement.

“Agreement”

the share sale and purchase agreement dated 31 October
2017 entered into between the Company and the Vendors,
pursuant to which the Company shall acquire the Sale
Shares from the Vendors.

“Asset Link”

有限会社アセットリンク(Asset Link Inc.*), a company
incorporated in Japan with limited liability on 9 March 2005
and whose registered address is 4114-8, Kasahara-cho,Tajimi-City, Gifu, 507-0911, Japan.

“Board”

board of directors of the Company.

“business day(s)”any day (other than a Saturday, Sunday or a public holiday)
on which banks in Japan are generally open for business.

“Cambodia”

Kingdom of Cambodia.

“close associate(s)”has the meaning ascribed to it under the Listing Rules.

–8–

“Company”

株式会社ニラク▪ジー▪シー▪ホールディングス (NIRAKU GC
HOLDINGS, INC.*), a stock company incorporated in Japan
with limited liability on 10 January 2013 (registration
number 3800-01-022352) and whose registered address is1-1-39 Hohaccho, Koriyama-shi, Fukushima, Japan and
the Shares of which are listed on the Main Board of theStock Exchange (Stock Code: 1245).

“Completion”

completion of the Acquisition“Completion Date”

the day on which the completion of the Acquisition shalltake place, which shall be 20 November 2017 or such otherdate as the parties of the Agreement may agree in writing.

“Consideration”

means the consideration of the Acquisition as described in“Consideration” above.

“core connected person(s)” has the meaning ascribed to it under the Listing Rules.
“Cut-off Date”

the last day of the preceding month prior to the Completion
Date which is expected to be 31 October 2017 subject tothe change of Completion Date.

“DGC”

Dream Games (Cambodia) Co., Ltd, a company
incorporated in Cambodia with limited liability on 9 January
2013 and whose registered address is #235, st63,
Bengkangkong1, Chamkamon, Phnom Penh, Cambodia, awholly-owned subsidiary of the Target Company.

“DGJ”

ドリームゲームズ株式会社 (Dream Games Co., Ltd*), acompany incorporated in Japan with limited liability on 9April 2013 and whose registered address is 2-37-17,
Higashi Ikebukuro, Toshima-ku, Tokyo, Japan, a whollyowned subsidiary of the Target Company.

“DGV”

Dream Games Vietnam Company Limited, a company
incorporated in Vietnam with limited liability on 10 April
2013 and whose registered address is Tower, 193 Dinh
Tien Hoang Str., Da Kao Ward, District 1 Ho Chi Minh City,Vietnam, a wholly-owned subsidiary of the Target
Company.

“Director(s)”directors of the Company.

“Hong Kong”

The Hong Kong Special Administrative Region of thePeople’s Republic of China.

“JPY”

Japanese yen, the lawful currency in Japan.
–9–“LiNK-UP”

L i N K - U P 株式会 社 ( L i N K - U P C o . , L t d * ) , a c o m p a n yincorporated in Japan with limited liability on 6 January
1995 and whose registered address is 4-3-15, Jingumae,
Shibuya-Ku, Tokyo, 150-0001, Japan.

“Listing Rules”

The Rules Governing the Listing of Securities on the Stock
Exchange.

“Laws”

law, government ordinance, regulation, order, municipalordinance, official notification, administrative guidance,
guideline judicial or administrative agency drafts and anyother regulations which are publicly available or informed tothe Vendors, the Company or Target Group in Singapore,Vietnam, Cambodia, Hong Kong and Japan.

“Long Stop Date”

6 months after the execution date of the Agreement or 20
business days after failure of registration for change ofshareholders in the Target Company, whichever is earlier.

“Parties”

the Vendors and the Company and each a Party.

“Sale Share(s)”1,580,532 ordinary shares and 625,953 preferred shares,
representing the total number of outstanding shares issued
by the Target Company after the conversion of convertible
bonds (which is expected to take place before Completion).

“Singapore”

Republic of Singapore.

“Share(s)”ordinary share(s) issued by the Company.

“Shareholder(s)”shareholders of the Company.

“Stock Exchange”

The Stock Exchange of Hong Kong Limited.

“Subsidiary(ies)”

has the meaning ascribed to it under the Listing Rules.

“Target Company”

Dream Games Singapore Pte. Ltd, a company incorporated
in Singapore with limited liability on 3 November 2014 andwhose registered address is 80 Robinson Road #10-01A
Singapore 068898.

“Target Group”

Target Company with its subsidiaries, including DGV, DGC
and DGJ.

“US$”

U.S. Dollars, the lawful currency of the United States.

– 10 –

“Vendors”

vendors of the Sale Shares comprising 渡邊久憲 (HisanoriWATANABE*), Asset Link, 高山和紀 (KazunoriTAKAYAMA*), 小澤直道 (Naomichi OZAWA*), 山村家康
(Ieyasu YAMAMURA*), 丸山敬太 (Keita MARUYAMA*),
LiNK-UP, 江口正人 (Masato EGUCHI*), 齋藤幹雄 (Mikio
S A I T O * ) , 松村章吾 ( S h o g o M A T S U M U R A * ) , 舩越孝至(Takashi FUNAKOSHI*), 天尾司 (Tsukasa AMAO*), 高井隆司(Ryuji TAKAI*) and 林政之 (Masayuki HAYASHI*), eachbeing a party to the Agreement.

“Vietnam”

Socialist Republic of Vietnam.
On behalf of the Board of株式会社ニラク▪ジー▪シー▪ホールディングス
NIRAKU GC HOLDINGS, INC.*Hisanori TANIGUCHI(also known as JEONG Seonggi)
Chairman, Executive Director and Chief Executive Officer

Fukushima, Japan, 31 October 2017
As at the date of this announcement, the executive Director is Hisanori TANIGUCHI (alsoknown as JEONG Seonggi); the non-executive Director is Hiroshi BANNAI and theindependent non-executive Directors are Hiroaki MORITA, Norio NAKAYAMA, Michio
MINAKATA and Yoshihiro KOIZUMI.
*For identification purposes only– 11 –