Prime Media Holdings, Inc.PRIM

Memorandum of Agreement between Prime Media Holdings Inc. (“PRIM” or the “Company”) and Michelle Ayangco and Hermogene Real (“PCMC Shareholders”), the majority stockholders of Philippine CollectiveMedia Corporation (“PCMC”)

On July 30, 2021, PRIM and the majority stockholders of PCMC, namely, Michelle Ayangco and Hermogene Real (“PCMC Shareholders”), entered into a Memorandum of Agreement wherein the PCMC Shareholders shall jointly subscribe to One Billion Six Hundred Seventy Nine Million Nine Hundred Sixty Six Thousand Four Hundred (1,679,966,400) common shares of the Company to be issued from an increase in authorized capital stock which shall be paid in the form of PCMC shares based on third-party appraisal, subject to confirmation by a third-party fairness opinion and other closing conditions, in order to obtain the business, assets and ownership of PCMC. After the transaction, the PCMC Shareholders will gain control and majority ownership of approximately 70% of outstanding capital stock of the Company. On the other hand, PCMC will become a subsidiary of PRIM.

Michelle Ayangco and Hermogene Real (“PCMC Shareholders”) shall subscribe to One Billion Six Hundred Seventy Nine Million Nine Hundred Sixty Six Thousand Four Hundred (1,679,966,400) shares out of an increase in authorized capital stock of the Company at the subscription price and par value of One Peso (Php 1.00) per share (the “Price Per Share”) or total subscription price of One Billion Six Hundred Seventy Nine Million Nine Hundred Sixty Six Thousand Four Hundred Pesos (Php 1,679,966,400.00). For and in consideration of the said Subscription, the PCMC Shareholders shall assign, transfer and deliver to the Company a total of Three Hundred Forty Nine Thousand Nine Hundred Ninety Three (349,993) PCMC shares (the “PCMC Shares) at an agreed value of One Billion Six Hundred Seventy Nine Million Nine Hundred Sixty Six Thousand Four Hundred Pesos (Php 1,679,966,400.00) as supported by a third-party appraisal report, subject to confirmation by a third-party fairness opinion and other closing conditions.

The transaction is subject to (a) approval of PRIM shareholders, (b) approval by Congress for change of controlling interest in PCMC as required in Republic Act No. 9773 as amended by Republic Act No. 11508, (c) approval of the increase in capital stock by the Securities and Exchange Commission, (d) issuance of the Certificate Authorizing Registration by the Bureau of Internal Revenue for transfer of PCMC shares to the Company; (e) approval by the PSE of the listing of the subscribed shares.

The shareholders’ meeting of the Company is set on September 22, 2021. As soon as approved, the Subscription Agreement and Deed of Exchange/ Assignment shall be executed and the necessary application for the increase in Authorized Capital Stock and the amendments to the Articles of Incorporation shall be filed with the Securities and Exchange Commission (SEC) sometime October 2021. The Company expects SEC approval and issuance of the Certificate Authorizing Registration before the end of the year.

PCMC will apply for congress approval for change of controlling interest on or before the end of August and expects to secure the approval on or before the end of the year.

The transaction is not subject to PCC approval or notification as the transaction value is below the threshold.

The purpose of the transaction is to transform the Company into a viable and operational business entity and address its capital deficiency, negative equity, and non-operation. The transaction will result to folding-in of PCMC into the Company thereby making PCMC a subsidiary of the Company. With the national franchise of PCMC, the Company can engage in an active business of mass media and further leverage its franchise and network for use by existing content providers in need of broadcasting rights.

The subscription with a total consideration of One Billion Six Hundred Seventy Nine Million Nine Hundred Sixty Six Thousand Four Hundred Pesos (Php 1,679,966,400.00), shall be satisfied by PCMC Shareholders’ assignment, conveyance, transfer and delivery of 349,993 PCMC shares which effectively transfers the assets, business and ownership of PCMC to PRIM.

The contemplated transaction involves the fold-in of PCMC into the Company. The Subscription Price at par value of PhP 1.00 per share is premium over the Company’s current book value of negative 0.23 centavos (PhP-0.23) per share according to the Company’s Audited Financial Statement ending December 31, 2020. The valuation of PCMC shares, on the hand, is based on third-party appraisal report.

PRIM currently has no operations. It has capital deficit and negative equity.

The transaction will allow the Company to obtain the assets, business, control and majority ownership of PCMC, which will result to PCMC becoming a subsidiary of the Company.

With the acquisition of the assets and businesses of PCMC, the Company will become a commercially operational company having a going-concern status with a potentially profitable and viable business.

The Company intends to expand the business of PCMC. With PCMC’s national franchise, the Company may use this as leverage to provide other content providers an avenue to broadcast their contents regionally and nationwide. The Company views the present transaction as an opportunity with the limited national media franchise granted by Congress and the growing need for media broadcasting.

PRIM currently has no operations. It has capital deficit and negative equity.

The transaction will allow the Company to obtain the assets, business, control and majority ownership of PCMC, which will result to PCMC becoming a subsidiary of the Company.

With the acquisition of the assets and businesses of PCMC, the Company will become a commercially operational company having a going-concern status with a potentially profitable and viable business.

The Company intends to expand the business of PCMC. With PCMC’s national franchise, the Company may use this as leverage to provide other content providers an avenue to broadcast their contents regionally and nationwide. The Company views the present transaction as an opportunity with the limited national media franchise granted by Congress and the growing need for media broadcasting.

PCMC was incorporated in May 21, 2008 with a primary purpose of establishing and engaging in the business of radio and television broadcasting. It was granted a legislative franchise by virtue of Republic Act No. 9773 to cover Region VIII (Eastern Visayas). In 2020, its legislative franchise was amended by Republic Act No. 11508 to expand to national coverage.

PCMC currently operates PRTV in Tacloban and 18 radio stations under FMR (Favorite Music Radio).

Please refer to the attached Company Profile of PCMC.

Atty. Hermogene Real is the President and majority shareholder of Mairete Asset Holdings Inc., who owns 11% of the Company. Rolando S. Santos is a director and officer of Mairete Asset Holdings Inc. and the Company. There are no other material relationships between or involving PCMC Shareholders and PRIM, its directors, officers and/or stockholders of all the parties to the transaction

The directors of PRIM have no personal interest in the transaction.

The Company shall conduct a Shareholders’ Meeting to secure approval of the transaction.

The consideration shall be based on third party appraisal report to be confirmed by third party fairness opinion.

Ms. Michelle F. Ayangco is 48 years old. She graduated from Rizal Technological University with a degree in BS Accountancy. She is a Certified Public Accountant. She is the current President and Chairman of Sequioa Business Management Corporation, Director and Corporate Secretary of Palm Avenue Realty and Development Corporation, Director and Treasurer of Palm Avenue Holdings Company Inc. and the Corporate Secretary of Trans Middle East Philippine Equities Inc.

Atty. Hermogene H. Real is 65 years old. She graduated from the University of the Philippines with a degree in Bachelor of Laws. She was admitted to the Philippine Bar in 1998. She is the President of Mairete Asset Holdings Inc. and Southern Estates Integrated Park Inc. She serves as Director to Bright Kindle Resources and Investments Inc., Brightgreen Resources Corp., Southern Alluvial Minerals and Alumina Resources Inc., Benguetcorp. Laboratories Inc. She holds the position of Corporate Secretary in Benguet Corporation, Benguetcorp. Nickel Mines Inc., and Universal Re Condominium Corporation. She is likewise the Assistant Corporate Secretary of Doña Remedios Trinidad Romualdez Medical Foundation Inc.

For 2021 and 2022, PCMC intends to expand its radio stations to other provinces under the brand, Favorite Music Radio (FMR) as part of its objectives to have nationwide radio broadcasting coverage.

For television programming and stations, PCMC is looking into entering into business arrangement or partnership to collaborate with companies that have media content and facilities but cannot broadcast the same due to lack of franchise, which will enable it to broadcast nationwide.

The declassification of PRIM’s preferred shares is in line with the cleaning-up efforts of management to remove liabilities arising out of its previous banking operations. Said declassification is likewise an undertaking of PRIM under its 30 July 2021 Memorandum of Agreement with the RYM Business Corp, and the majority shareholders of Philippine CollectiveMedia Corp. Hence, after the closing of transaction with PCMC, the preferred shares will now be zero and all will be converted to common shares. Currently, there is a total of 14,366,260 issued preferred shares subject to a conversion ratio of 25 preferred shares to 1 common share.