DIGITAL + VOICE MEDIA www.dvmmedia.com.auLevel 2, 350 Kent...

DIGITAL + VOICE MEDIA www.dvmmedia.com.au
Level 2, 350 Kent St
Sydney NSW 2000
T: +61 2 9299 2289
F: +61 2 9299 2239
ABN 80072 964 179
21 November 2006
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The Company Announcement Platform
Australian Stock Exchange Limited
Dear Sir/Madam
SUBSCRIPTION FOR SHARES
The Directors of Digital and Voice Media Limited (DVM) are pleased to advise that DVM has entered into a
Binding Terms Sheet with XDK South China Petrochemical Limited (a company incorporated in Hong Kong)
(XDK), pursuant to which DVM has agreed to subscribe for and be issued 17.5% of the issued capital of
XDK for a total subscription sum of $1.25 million.
XDK has entered into a co-operative joint venture contract with Shenzhen Zhongyou Tongda Petroleum Co.
LTD (a Chinese company) (SZT) pursuant to which:
(a) XDK has agreed to fully contribute the required funding for the joint venture’s projects to include
expansion of the retail service station network, wholesale of fuel oil to power stations, gasoline and
gas oil to service stations, and industrial customers, oil storage facilities and bunker fuel serving the
world’s fourth largest container port (Shenzhen, PRC);
(b) SZT has agreed to provide the joint venture with a sales channel for petroleum products, a relevant
retail service station network and technical personnel; and
(c) the parties have agreed that the profit distribution and losses shared by both parties shall be 90%
to XDK and 10% to SZT.
The joint venture is in the process of finalising licences to be an integrated supplier of petroleum products in
the Guangdong area, the south eastern sea board province of China, which contributes 70% of China’s
petroleum consumption demand.
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It is intended that the shareholders in XDK will enter into a shareholders agreement with DVM
which will provide for the following material terms:
(a) the board of XDK will consist of not more than 3 directors, one of which will be a
nominee of DVM;
(b) decisions on certain key material matters will be made subject to the unanimous
approval of all directors and/or shareholders (as the case may be);
(c) XDK will provide appropriate monthly, quarterly and annual financial reports to DVM
and the other shareholders;
(d) DVM will have a pre-emptive right to fully fund all future equity fundraising proposed
to be undertaken by XDK; and
(e) the shareholders will be required to offer their shares in XDK to DVM prior to selling
them to any third party.
The shareholders agreement will otherwise be on ordinary commercial terms.
The Binding Terms Sheet is subject to completion by DVM of due diligence on XDK and also
the parties entering into the shareholders agreement.
Please contact the undersigned if you have any queries regarding this matter.
Yours faithfully
Ross Kestel
Director
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About SZT
SZT is a downstream petroleum company operating in the China petroleum
system and is the only “non-state” owned enterprise to have been granted the
crude oil and finished product import license in the Shenzhen Huanan region.
SZT’s current operations include retail service stations, wholesale gasoline and gas
oil to industrial users, and it owns 25,000 m³ of storage facilities. SZT’s expansion
plans include supplying fuel oil to power stations, bunker fuel in the Shenzhen
East-West harbour, new retail service stations and new oil product and chemical
jetty and tank yard.
SZT was formed in 1999 and is a profitable operation under the “closed” China
petroleum system. With China’s entry into WTO, SZT is preparing itself for foreign
competiton through its expansion plans. SZT plans to go to the international
capital markets to fuel its expansion. The current board and management team
of SZT comprised of staff seconded from Petrochina and Tongda Chemical.
About XDK
XDK is a company incorporated in Hong Kong for the purpose of tapping funds
from the international capital market to fund the SZT’s expansion plan.
Shareholders of XDK are current management of SZT, and Chinese nationals with
local knowledge and connections in industry and government.
About the China Petroleum Market
With oil consumption growing at 7.5% per year since the 1990’s China’s crude oil
import estimates of 150 million tonnes for 2006 is second only to USA in terms of
import and consumption. Demand for petroleum products is underpinned by
China’s GDP growth of projected 8-10% per annum for the next 3-5 years and
new car growth is projected at 10-15% per annum. The total value of the oil
market in China is estimated to be US$200 billion.