PACIFIC CARRIERS LIMITED

Transcription

1 VERY IMPORTANT DOCUMENT - INDEPENDENT DIRECTORS AND ANZ S ADVICE TO SHAREHOLDERS IN RELATION TO THE OFFER BY HOVERT INVESTMENTS PTE LTD This Offeree Circular is dated 11 April 2001 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. If you are in doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. If you have sold your ordinary Shares, you should immediately forward this Circular to the purchaser or to the bank, stockbroker or agent through whom the sale was effected for onward transmission to the purchaser. PACIFIC CARRIERS LIMITED (Incorporated in the Republic of Singapore) Circular to Shareholders relating to the Conditional Voluntary Cash Offer By The Development Bank of Singapore Ltd For and on behalf of Hovert Investments Pte Ltd (Incorporated in the Republic of Singapore) to acquire all the outstanding ordinary shares of S$0.50 each in the capital of Pacific Carriers Limited not already owned, controlled or agreed to be acquired by Hovert Investments Pte Ltd or any party deemed to be acting in concert with it Financial Adviser to the Independent Directors of Pacific Carriers Limited ANZ Singapore Limited (Incorporated in the Republic of Singapore) SHAREHOLDERS WHO WISH TO ACCEPT THE OFFER MUST DO SO BY 3.30 P.M. ON 25 APRIL 2001 or such later dates(s) as may be announced by or on behalf of Hovert Investment Pte Ltd

2 DEFINITIONS The following definitions apply throughout this Circular except where the context otherwise requires:- ANZ : ANZ Singapore Limited Act : Companies Act, Chapter 50 of Singapore Adjusted NTA : Adjusted audited NTA for the Group as at 31 December 2000 Announcement : The announcement dated 15 March 2001 made by DBS Bank, for and on behalf of the Offeror, in relation to the Offer Articles : Articles of Association of PCL Basic Offer Price : S$1.25 in cash Camsward : Camsward Pte Ltd CDP : The Central Depository (Pte) Limited Closing Date : 3.30 p.m. on 25 April 2001 or such later date(s) as may be announced by or on behalf of the Offeror, being the last day for lodgement of acceptances of the Offer Code : The Singapore Code on Take-overs and Mergers (1985 Revised Edition) Company or PCL : Pacific Carriers Limited DBS Bank : The Development Bank of Singapore Ltd Directors : Directors of the Company as at the Latest Practicable Date dwt : Deadweight tonne EBITDA : Earnings before interest, tax, depreciation and amortisation Enhanced Offer Price : S$1.40 in cash EPS : Earnings per Share ESOS : PCL Employee Share Option Scheme EV : Enterprise value being market capitalisation and net debt Form of Acceptance : The form of acceptance relating to the Offer accompanying the Offer Document for use by Shareholders FY : Financial year ended 31 December Group or PCL Group : PCL and its subsidiaries Independent Directors : The Directors who are independent for the purpose of making recommendations to the Shareholders in respect of the Offer, namely Phua Cheng Tar, Tan Chin Hee, Chang See Hiang and Tan Swan Jeng IPO : Initial Public Offer 2

3 Kuok Singapore : Kuok (Singapore) Limited Latest Practicable Date : 30 March 2001, being the latest practicable date prior to the printing of this Circular MBC : Malaysian Bulk Carriers Sdn Bhd Market Day : A day on which the SGX-ST is open for trading of securities NAV : Net asset value NTA : Net tangible asset(s) Offer : The conditional voluntary cash offer by DBS Bank for and on behalf of the Offeror to acquire the Offer Shares on the terms set out in the Offer Document Offer Document : The document dated 2 April 2001 relating to the Offer issued by DBS Bank for and on behalf of the Offeror Offer Shares : All the outstanding Shares not already owned, controlled or agreed to be acquired by the Offeror or any party deemed to be acting in concert with the Offeror Offeror : Hovert Investments Pte Ltd Options : Options granted under the ESOS to subscribe for new Shares Optionholder : A holder of the Options PCL Group : PCL and its subsidiaries PER : Price earnings ratio Securities Account : A securities account (other than a securities sub-account) maintained by a Depositor with CDP SESALL Index : The Singapore All Equities Index SGX-ST : Singapore Exchange Securities Trading Limited SGX Transportation Index : The Singapore Transport/Storage/Communication Equities Index Shareholder(s) : Holder(s) of Shares, including Depositors whose Securities Accounts are credited with Shares or who have purchased Shares on the SGX- ST at any time on or prior to the close of the Offer Share Registrar : Lim Associates (Pte) Ltd Shares : Ordinary shares of $0.50 each in the capital of PCL SIC : The Securities Industry Council of Singapore S$ and Singapore cents : Singapore dollars and cents respectively US$ and US cents : United States of America dollars and cents respectively % or per cent. : Per centum or percentage 3

4 The terms Depositor and Depository Agent shall have the meanings assigned to them respectively in Section 130A of the Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall include corporations. Any reference in this Circular to any statute or enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any word defined under the Act or the Code or any other statute or any modification thereof and used in this Circular shall have the meaning assigned to it under the Act or the Code or that statute or any modification thereof, as the case may be, unless the context otherwise requires. Any reference to a time of day in this Circular shall be a reference to Singapore time, unless otherwise stated. Any discrepancies in tables included herein between the amounts listed and the totals thereof are due to rounding; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. 4

5 CONTENTS Page LETTER FROM THE DIRECTORS 1. Introduction Background The Offer Directors Recommendation Directors Interests Action to be Taken Responsibility Statement LETTER FROM ANZ 1. Introduction Terms of Reference The Offer Information on the Offeror and Kuok Singapore Information on the PCL Group Intention of the Offeror and Reason for the Offer Financial Assessment of the Offer Compulsory Acquisition and Delisting Other Considerations ESOS Recommendation Action to be Taken APPENDICES I. Information on the Offeror II. General and Statutory Information III. Statement Furnished by PCL in Compliance with Part C of the Tenth Schedule to the Act IV. Auditors Report and Audited Accounts of PCL and the PCL Group for FY V. Valuation Certificates

6 PACIFIC CARRIERS LIMITED (Incorporated in the Republic of Singapore) Board of Directors:- Registered Office:- Teo Joo Kim 1 Kim Seng Promenade Chang See Hiang #07-02 Great World City Kuok Khoon Kuan Singapore Phua Cheng Tar Tan Chin Hee Tan Swan Jeng Wu Long Peng 11 April 2001 To: The Shareholders of Pacific Carriers Limited Dear Sir/Madam CONDITIONAL VOLUNTARY CASH OFFER BY DBS BANK, FOR AND ON BEHALF OF THE OFFEROR, FOR THE OFFER SHARES 1. INTRODUCTION On 15 March 2001, DBS Bank issued an announcement (the Announcement ) for and on behalf of the Offeror, a wholly-owned subsidiary of Kuok Singapore, that the Offeror would make a conditional voluntary cash offer for PCL in accordance with the Code and Section 213 of the Act on the following basis:- (a) for each Offer Share : S$1.25 in cash (the Basic Offer Price ); and (b) in the event that acceptances are received for at least 75 per cent. of the Offer Shares, the Basic Offer Price shall be increased to S$1.40 in cash (the Enhanced Offer Price ). 2. BACKGROUND As at the date of this Circular, the Offeror does not own or control nor has it agreed to acquire any Shares. Kuok Singapore and Camsward together own, control or have agreed to acquire an aggregate of 115,210,000 Shares, representing approximately 38.4 per cent. of the issued share capital of PCL. The 115,210,000 Shares include an aggregate of 1,666,000 Shares which were acquired at prices ranging from S$0.78 to S$0.87 in cash during the 12-month period immediately preceding the date of the Announcement of the Offer. The Offeror has received irrevocable undertakings from Kuok Singapore and Camsward to accept the Offer in respect of all the Shares held by them from time to time prior to the close of the Offer, being an aggregate of 115,210,000 Shares as at the date of this Circular. In addition, Messrs Teo Joo Kim, Wu Long Peng, Kwok Kian Hai and Mdm Kuok Oon Kwong who are directors of Kuok Singapore and Mr. Kuok Khoon Kuan who is a director of PCL, and who are presumed to be parties acting in concert with the Offeror, together own, control or have agreed to acquire an aggregate of 1,025,000 Shares, representing approximately 0.3 per cent. of the issued share capital of PCL. The 1,025,000 Shares include an aggregate of 287,000 Shares which were acquired by Messrs Teo Joo Kim and Kuok Khoon Kuan at prices ranging from S$0.72 to S$0.765 in cash during the 12-month period preceding the date of the Announcement. During that same 12- month period 10,000 Shares had also been sold by Kuok Khoon Kuan. In addition, Messrs Teo Joo Kim and Wu Long Peng, who are directors of PCL, Kuok Singapore and the Offeror, own in aggregate 1,095,000 Options exercisable into 1,095,000 new Shares, which were granted under the ESOS on 2 November Mr. Kuok Khoon Kuan who is a director of PCL also owns 538,000 Options exercisable into 538,000 new Shares, which were granted to him under the ESOS on 2 November

7 The Offeror and the parties presumed to be acting in concert with it, together own, control or have agreed to acquire an aggregate of 126,734,000 Shares, representing approximately 42.2 per cent. of the issued share capital of PCL as at Latest Practicable Date. The Directors have appointed ANZ as their independent financial adviser in respect of the Offer. The purpose of this Circular is to provide relevant information pertaining to the Offer and to set out the recommendation of the Independent Directors and the advice of ANZ in relation to the Offer to Shareholders. Shareholders should consider carefully the recommendation of the Independent Directors and the advice of ANZ before deciding on whether to accept the Offer. Further details relating to the background to the Offer is set out in the Offer Document. Shareholders should have received a copy of the Offer Document. 3. THE OFFER As set out in the Offer Document, the Offeror has offered to acquire the Offer Shares on the following principal terms and conditions:- (a) for each Offer Share : S$1.25 in cash representing the Basic Offer Price; and (b) in the event that acceptances are received for at least 75 per cent. of the Offer Shares, the Basic Offer Price shall be increased to S$1.40 in cash representing the Enhanced Offer Price. Shareholders may elect to receive the Basic Offer Price, in which event they will receive:- l the Basic Offer Price of S$1.25 in cash in the event the Offer becomes unconditional but acceptances are received for less than 75 per cent. of the Offer Shares l the Enhanced Offer Price of S$1.40 in cash in the event the Offer becomes unconditional and acceptances are received for 75 per cent. or more of the Offer Shares Alternatively, Shareholders may elect to receive the Enhanced Offer Price, in which event:- l their acceptances will be rejected and will be returned to them if acceptances are received for less than 75 per cent. of the Offer Shares, notwithstanding that the Offer may have become unconditional l they will receive the Enhanced Offer Price of S$1.40 in cash in the event the Offer becomes unconditional and acceptances are received for 75 per cent. or more of the Offer Shares Each Offer Share will be acquired free from all liens, charges and other encumbrances and together with all rights attached thereto as at the date of the Announcement and hereafter attaching thereto, including the right to all dividends, rights and other distributions (if any) declared, paid or made thereon hereafter (including any dividend which may be declared, paid or made by the Company in respect of FY2000). The Offer shall be conditional upon the Offeror having received, by the close of the Offer, acceptances in respect of such number of Offer Shares which, when taken together with the Shares owned, controlled or agreed to be acquired by the Offeror or any party acting in concert with it (either before or during the Offer), will result in the Offeror and any party acting in concert with it, holding such number of Shares carrying more than 50 per cent. of the voting rights attributable to the issued share capital of the Company as at the close of the Offer. The Offer will, therefore, not become or be capable of being declared unconditional until the close of the Offer unless at any time prior to the close of the Offer, the number of Shares owned, controlled or agreed to be acquired by the Offeror or any party acting in concert with it (either before or during the Offer), when taken together with the number of Shares represented by valid acceptances received pursuant to the Offer, exceeds 50 per cent. of the maximum potential issued share capital of the Company. For these purposes, the maximum potential issued share capital of the Company means the total number of Shares which would be in issue had all the Options been validly exercised as at the date of such declaration. 7

8 The Offer is being extended to all Optionholders, for the period for which the Offer remains open for acceptance, for any new Shares which have been unconditionally allotted and issued fully paid on or prior to the Closing Date pursuant to the valid exercise of Options under the ESOS. The Offer to Optionholders is on the same terms and conditions as set out in the Offer Document. All unexercised Options after the period of 6 months from the date on which the Offer becomes or is declared unconditional will be permitted to lapse in accordance with the rules and regulations of the ESOS. However, if during such period of 6 months, the Offeror becomes entitled or bound to exercise the rights of compulsory acquisition of the Shares under Section 215(1) of the Act and gives notice to Optionholders that it intends to exercise such rights on a specified date, the Options shall remain exercisable until the expiry of that specified date. The Offer will close at 3.30 p.m. on 25 April 2001, or such later date(s) as may be announced from time to time by or on behalf of the Offeror. 4. DIRECTORS RECOMMENDATION In arriving at their recommendation, the Independent Directors have carefully considered the advice given by ANZ. In arriving at its conclusion and recommendation, ANZ has taken into consideration, inter alia, the following:- (a) on the basis of the existing share capital and on a fully diluted basis, the Basic Offer Price represents discounts of approximately 12.6 per cent and 11.9 per cent respectively to the Adjusted NTA per Share. On the basis of the existing share capital and on a fully diluted basis, the Enhanced Offer Price represents a discount of approximately 1.6 per cent and 0.7 per cent respectively to the Adjusted NTA per Share. Accordingly, the Basic Offer Price and the Enhanced Offer Price are within the range of premia over / (discounts to) the adjusted NTA for completed general offers in accordance with the Code in Singapore in 2000 and 2001; (b) (c) (d) on the basis of the existing share capital and on a fully diluted basis, the Basic Offer Price discounts of approximately 12.6 per cent. and 11.9 per cent. and the Enhanced Offer Price discounts of 1.6 per cent. and 0.7 per cent. to the Adjusted NTA per Share, as described in (a) above, are less than the discount of 30.7 per cent implied to adjusted NTA for the takeover of Osprey Maritime Limited and the discount of 50.3 per cent. implied to audited NAV per share for the recent privatisation in Hong Kong of bulk carrier Wah Kwong Shipping Holdings Limited; the premium of 40.4 per cent. to the last traded price prior to the Announcement implied by the Basic Offer Price and the premium of 57.3 per cent. to the last traded price prior to the Announcement implied by the Enhanced Offer Price appears to adequately compensate Shareholders from the perspective of a takeover to acquire majority control, given that the Offeror or its concert parties already control approximately 42.4 per cent. of the issued share capital of PCL as at the date of Offer and would not normally be expected to offer a significant premium for securing further control of the Company; on the basis of the existing share capital and on a fully diluted basis, the Basic Offer Price represents discounts of approximately 2.3 per cent and 1.7 per cent respectively to audited NTA per Share as at 31 December On the basis of the existing share capital and on a fully diluted basis, the Enhanced Offer Price represents premia of approximately 9.8 per cent and 10.7 per cent respectively to audited NTA per Share as at 31 December Accordingly, the Basic Offer Price and the Enhanced Offer Price are within the range of the historical premia over / (discounts to) NTA per share of the selected companies comparable to PCL based on their respective last traded market prices as at the Latest Practicable Date; 8

9 (e) (f) on the basis of the existing share capital and on a fully diluted basis, the EV/EBITDA multiples of 8.0 times and 8.1 times respectively implied by the Basic Offer Price are within the range of the EV/EBITDA multiples of the selected companies comparable to PCL based on their respective last traded market prices as at the Latest Practicable Date. On the basis of the existing share capital and on a fully diluted basis, the EV/EBITDA multiples of 9.5 times and 9.6 times respectively implied by the Enhanced Offer Price are greater than the EV/EBITDA multiples of each of the selected companies comparable to PCL based on their respective last traded market prices as at the Latest Practicable Date; on the basis of the existing share capital and on a fully diluted basis, the price to EBITDA multiples of 11.8 times and 12.0 times respectively implied by the Basic Offer Price and the price to EBITDA multiples of 13.3 times and 13.5 times respectively implied by the Enhanced Offer Price are greater than the price to EBITDA multiples of each of the selected companies comparable to PCL based on their respective last traded market prices as at the Latest Practicable Date; (g) on the basis of the existing share capital and on a fully diluted basis, the historical PER of 6.8 and 6.9 respectively implied by the Basic Offer Price and the historical PER of 7.6 and 7.8 respectively implied by the Enhanced Offer Price, are within the range of the historical PER of the selected companies comparable to PCL based on their respective last traded market prices as at the Latest Practicable Date; (h) (i) (j) (k) as the Latest Practicable Date, there is no publicly available evidence of an alternative offer for the Shares from any third party; it would appear that the Enhanced Offer Price has supported the market price of the Shares since the date of the Announcement to the Latest Practicable Date. The PCL share price has appreciated 50.6 per cent. since the Announcement whereas the SGX Transportation Index has declined 14.8 per cent.; the current share price, which appears to be supported by the Offer as described in (i) above, in conjunction with the high average dividend yield of 5.3 per cent. as compared to 1.9 per cent. for the SESALL Index and 2.4 per cent. for the SGX Transportation Index since PCL s initial public offer in 1990, provides a Shareholder with a positive overall return and higher return as compared to the price appreciation of both Indices. This was not evident prior to the Announcement of the Offer; in the event the Offeror acquires less than 90 per cent. of the issued and paid up share capital pursuant to the Offer and is not entitled to compulsorily acquire the Shares under Section 215(1) of the Act, the Offeror intends to procure PCL to convene an EGM to approve a resolution to delist PCL pursuant to Clause 208 of the SGX-ST Listing Manual. In order to achieve a voluntary delisting pursuant to Clause 208 of the SGX-ST Listing Manual, the resolution to delist the Company at the EGM would need to be approved by a majority of at least 75 per cent. in nominal value of Shares held by Shareholders present and voting (which would include the Offeror s interest if it votes on the resolution) and must not be voted against by 10 per cent. or more in nominal value of Shares held by such Shareholders present and voting. In this respect, Shareholders should note that Clause 208(2)(d) of the SGX-ST Listing Manual requires a reasonable exit alternative, which should normally be in cash, to be offered to the Shareholders. However, under Rule 34(2) of the Code, the Offeror will not be able to offer a cash exit offer higher than the final offer price for each Share, without the consent of the SIC, if the Offeror should decide to seek a delisting of PCL within 6 months of the close of the Offer. If the Shares are suspended or delisted, as the case maybe, there will not be an orderly public market for the Shares. It is also common for shares of non-listed companies to trade at discounts to the valuation of comparable listed companies. The Offer therefore presents an opportunity for Shareholders to realise their potentially illiquid investment under either Section 215(1) of the Act or Clause 208 of the SGX-ST Listing Manual. However, as at the Latest Practicable Date there is no certainty that PCL will be delisted. 9

10 The Independent Directors, having carefully considered the terms of the Offer and the advice provided by ANZ on pages 12 to 39 of this Circular, concur with the recommendation of ANZ in respect of the Offer. Accordingly, the Independent Directors advise Shareholders to accept the Offer and further advise Shareholders accepting the Offer to choose the Basic Offer Price. This will avoid Shareholders having their acceptances rejected if acceptances are received for less than 75 per cent. of the Offer Shares, notwithstanding that the Offer has become unconditional. In giving their recommendation and advice, the Directors and ANZ have not had regard to the specific investment objectives, financial situation, tax status or particular needs and constraints of any Shareholder. As different Shareholders would have different investment profiles and objectives, we advise that any individual Shareholder who may require advice in relation to his investment portfolio should consult his stockbroker, bank manager, solicitor, accountant or other professional adviser. Mr Teo Joo Kim is the Chairman of PCL and a Director of the Offeror. Mr Wu Long Peng is a Director of PCL and the Offeror. Mr. Kuok Khoon Kuan is an executive Director of PCL and pursuant to the Offer Document is presumed to be acting in concert with the Offeror. They are exempted by the SIC from making any recommendation to Shareholders in respect of the Offer. However, they remain responsible for the accuracy of facts stated and completeness of the information given by PCL to its Shareholders on the Offer, including information contained in announcements and documents issued by PCL or ANZ in connection with the Offer. 5. DIRECTORS INTERESTS Save as disclosed below, as at the Latest Practicable Date, none of the Directors is interested, directly or indirectly, in the Shares and Options. Number of Shares Number Name of Director Direct Interest Deemed Interest of Options Teo Joo Kim 152, ,000 (1) 920,000 Chang See Hiang 175,000 Kuok Khoon Kuan 380, ,000 Phua Cheng Tar 250, ,000 Tan Chin Hee 40, ,000 Tan Swan Jeng Wu Long Peng 122, ,000 Note:- (1) Teo Joo Kim is deemed to have a deemed interest in 241,000 Shares through (i) his interest in Jeki Private Limited which directly holds 239,000 Shares, and (ii) his wife, Chan Geok Boey, who directly holds 2,000 Shares, as at the Latest Practicable Date. 6. ACTION TO BE TAKEN Shareholders who wish to accept the Offer must do so not later than 3.30 p.m. on 25 April They should follow the procedures for acceptance set out in the Offer Document. Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document and the Form of Acceptance which have been sent to them. 10

11 7. RESPONSIBILITY STATEMENT The issue of this Circular to Shareholders has been approved by the Directors (including those who may have delegated detailed supervision of the preparation of this Circular) who have taken all reasonable care to ensure that the facts stated and the opinions expressed in this Circular are fair and accurate and that no material facts have been omitted. The Directors jointly and severally accept responsibility accordingly. The Circular constitutes fair and true disclosure of all material information which is likely to have a bearing on the decision of Shareholders on the Offer. Where information relating to the Offer or the Offeror and parties deemed to be acting in concert with it has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources. Yours faithfully For and on behalf of the Board of Directors Teo Joo Kim Chairman 11

12 11 April 2001 To: The Independent Directors Pacific Carriers Limited 1 Kim Seng Promenade #07-02 Great World City Singapore Dear Sirs, CONDITIONAL VOLUNTARY CASH OFFER BY DBS BANK, FOR AND ON BEHALF OF THE OFFEROR, FOR THE OFFER SHARES 1. INTRODUCTION ANZ has been appointed as independent financial adviser to the Independent Directors in respect of the Offer. This letter sets out our views and evaluation of the Offer and our recommendation thereon. Our recommendation is set out on pages 37 to 39 of this Circular. 2. TERMS OF REFERENCE In the course of our evaluation of the Offer, we have examined the Offer Document, other public information collated by us and information provided by the Directors and management of the Company. We have been informed by PCL that all material information in connection with the Offer has been disclosed to us and there are no other facts the omission of which would cause any information given to us to be misleading. Whilst care has been exercised in reviewing the information which we have relied on, we have not independently verified the information but have nevertheless made such inquiry and judgement as we deemed necessary and have found no reason to doubt the accuracy of the information provided to us. In rendering our advice and giving our recommendation, we have not had regard to the specific investment objectives, financial situation or individual circumstances of any Shareholder. As different Shareholders would have different investment objectives, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional advisers. 3. THE OFFER On 15 March 2001, the Announcement was issued in accordance with Section 213 of the Act and the Code whereby the Offeror will make the Offer on the following principal terms and conditions:- (a) for each Offer Share : S$1.25 in cash (the Basic Offer Price ); and (b) in the event that acceptances are received for at least 75 per cent. of the Offer Shares the Basic Offer Price shall be increased to S$1.40 in cash (the Enhanced Offer Price ). Shareholders may elect to receive the Basic Offer Price, in which event they will receive:- l the Basic Offer Price of S$1.25 in cash in the event the Offer becomes unconditional but acceptances are received for less than 75 per cent. of the Offer Shares l the Enhanced Offer Price of S$1.40 in cash in the event the Offer becomes unconditional and acceptances are received for 75 per cent. or more of the Offer Shares 12

13 Alternatively, Shareholders may elect to receive the Enhanced Offer Price, in which event:- l their acceptances will be rejected and will be returned to them if acceptances are received for less than 75 per cent. of the Offer Shares, notwithstanding that the Offer may have become unconditional l they will receive the Enhanced Offer Price of S$1.40 in cash in the event the Offer becomes unconditional and acceptances are received for 75 per cent. or more of the Offer Shares Each Offer Share will be acquired free from all liens, charges and other encumbrances and together with all rights attached thereto as at the date of the Announcement and hereafter attaching thereto, including the right to all dividends, rights and other distributions (if any) declared, paid or made thereon hereafter (including any dividend which may be declared, paid or made by the Company in respect of FY2000). On 15 March 2001, the Offeror had also received irrevocable undertakings from Kuok Singapore and Camsward to accept the Offer in respect of all the Shares held by them from time to time prior to the close of the Offer. Furthermore, Messrs Teo Joo Kim, Wu Long Peng, Kwok Kian Hai and Mdm Kuok Oon Kwong who are directors of Kuok Singapore and Mr. Kuok Khoon Kuan who is a director of PCL, and who are presumed to be parties acting in concert with the Offeror, together own, control or have agreed to acquire an aggregate of 1,025,000 Shares, representing approximately 0.3 per cent. of the issued share capital of PCL. The 1,025,000 Shares include an aggregate of 287,000 Shares which were acquired by Messrs Teo Joo Kim and Kuok Khoon Kuan at prices ranging from S$0.72 to S$0.765 in cash during the 12-month period preceding the Announcement of the Offer. During that same 12-month period 10,000 Shares had also been sold by Kuok Khoon Kuan. In addition, Messrs Teo Joo Kim and Wu Long Peng, who are directors of PCL, Kuok Singapore and the Offeror, own in aggregate 1,095,000 Options exercisable into 1,095,000 new Shares, which were granted to him under the ESOS on 2 November Mr. Kuok Khoon Kuan who is a director of PCL also owns 538,000 Options exercisable into 538,000 new Shares, which were granted to him under the ESOS on 2 November The Offeror and the parties presumed to be acting in concert with it, together own, control or have agreed to acquire an aggregate of 126,734,000 Shares, representing approximately 42.2 per cent. of the issued share capital of PCL as at the Latest Practicable Date. The Offer shall be conditional upon the Offeror having received, by the close of the Offer, acceptances in respect of such number of Offer Shares which, when taken together with the Shares owned, controlled or agreed to be acquired by the Offeror or any party acting in concert with it (either before or during the Offer), will result in the Offeror and any party acting in concert with it, holding such number of Shares carrying more than 50 per cent. of the voting rights attributable to the issued share capital of the Company as at the close of the Offer. The Offer will, therefore, not become or be capable of being declared unconditional until the close of the Offer unless at any time prior to the close of the Offer, the number of Shares owned, controlled or agreed to be acquired by the Offeror or any party acting in concert with it (either before or during the Offer), when taken together with the number of Shares represented by valid acceptances received pursuant to the Offer, exceeds 50 per cent. of the maximum potential issued share capital of the Company. For these purposes, the maximum potential issued share capital of the Company means the total number of Shares which would be in issue had all the Options been validly exercised as at the date of such declaration. 4. INFORMATION ON THE OFFEROR AND KUOK SINGAPORE The Offeror is an investment holding company incorporated in Singapore on 13 December It has an issued and fully paid up share capital of S$2.00 consisting of 2 ordinary shares of S$1.00 each. The Offerer is a wholly-owned subsidiary of Kuok Singapore. 13

14 Kuok Singapore is an investment holding company and through its subsidiaries is engaged in diverse business activities including trading of commodities, manufacturing of adhesive products, owner and operator of warehouses, shipping agency, agents for machinery and office equipment. In addition to its interest in PCL, Kuok Singapore has a 34.4 per cent shareholding in Allgreen Properties Limited, which is listed on the SGX-ST. 5. INFORMATION ON THE PCL GROUP PCL was incorporated in Singapore on 5 January 1973 and is listed on the Main Board of the SGX- ST, with a market capitalisation of approximately S$402 million as at the Latest Practicable Date. As at the Latest Practicable Date, PCL has an authorised share capital of S$500,000,000 divided into 1,000,000,000 Shares and an issued and paid-up share capital of S$150,000,000 divided into 300,000,000 Shares. The PCL Group, together with its associated companies, comprises a global shipping group with the following core activities:- l l l shipping - shipowning and ship management freight trading, brokerage and chartering feeder and breakbulk liner services As at 31 December 2000, the PCL Group and its associated companies (namely MBC, Pacnav S.A. and Pacsari Pte Ltd) own a total of 32 vessels comprising bulk carriers, product tankers and container feeder vessels. During the first 3 months of FY2001, the PCL Group and its associated companies took delivery of 3 vessels. The Group and its associated companies are expected to take delivery of a further 3 vessels during the period May 2001 to December The audited consolidated profit and loss accounts for the last 5 financial years ended 31 December 2000 are summarised below: Financial Years ended 31 December S$ Turnover 122, , , , ,750 Net Profit/(Loss) before income tax 24,027 38,108 37,932 44,434 56,371 Profit/(Loss) attributable to Shareholders 19,710 33,533 33,185 41,499 52,698 EPS (cents) NTA per Share (S$) Gross Dividend per Share (cents) Source: PCL s annual reports for FY1996 to 1999 and its audited financial statements for FY2000 Note: Certain comparatives have been reclassified to conform with current period presentation and changes and updates in the Singapore Statements of Accounting Standards. Review of Past Performance A review of the Group s operations for the last 5 financial years ended 31 December 2000 is set out below. FY 1996 Group turnover and profits decreased by 11 per cent. and 30 per cent. respectively primarily as a result of the lower dry bulk freight market which affected the Group s shipowning activities. Freight trading activities recorded a 60 per cent. improvement in performance. 14

15 FY 1997 Compared to 1996, Group turnover decreased by 7 per cent.. The decline was attributable to a reduction in the number of operating vessels with the sale of 3 vessels, weaker earnings from shipowning activities and freight trading losses. The shipping market in 1997 was generally poor and worsened in the later part of the year as a consequence of the Asian economic crisis. Earnings from shipowning activities weakened and freight trading recorded a loss largely due to losses incurred by 2 associate companies. However, operating profits after taxation increased by 86 per cent. primarily due to the following:- (i) gains of S$7,165,000 realised from the sale of vessels; (ii) foreign exchange gains of S$15,729,000; and (iii) higher interest income of S$4,256,000. Although the Group s operating profit improved in 1997, PCL s NTA value decreased as a result of the year end translation loss of S$38.9 million attributable to the PCL s share in the net worth of MBC. This exchange translation difference arose principally from the weakening of the Malaysian Ringgit against the Singapore Dollar on the translation of the Company s share in MBC s net worth at the beginning of the year. MBC is an associate company whose principal activity is investment holding where its subsidiaries are owners and operators of ships and vessels of every description. Its principal assets are ships that have their asset values denominated in US$ having a net book value of US$129 million as at 31 December 1997 and are generating US$ earnings. FY 1998 In 1998 Group turnover increased by 3 per cent and operating profit after tax declined 10 per cent. as compared to Turnover decreased for shipowning and freight trading activities as freight rates fell. However, turnover from container feeder services increased due to the expansion of this business. The Group s results from operations (excluding foreign exchange gains/losses) improved due to increased profits from associated companies, significantly improved freight trading margins due to contracts of affreightments taken in a declining charter market, higher interest income and lower overheads. Contracts of affreightment refer to contracts to transport a specified amount of cargo over a period of time. In performing these contracts PCL has the option of either utilising its own vessels or chartering third party vessels to perform the contracts. The latter option will enable PCL to enhance it s profit and achieve a higher operating margin by sub-contracting the cargo at lower rates in a declining charter market. The termination of 2 loss making associates also enhanced the results. In the absence of significant gains realised from the sale of vessels, shipowning profits were lower in 1998 in spite of less drydocking downtime, lower operating costs and profit contribution from MBC s new tankers. In 1998 feeder services recorded a significant increase in turnover leading to a positive contribution for this division. FY 1999 Group turnover increased 11 per cent. as compared to 1998 due primarily to a strong performance by the feeder and breakbulk liner services division where turnover improved 100 per cent.. The dry bulk freight market improved in the second half of 1999 in line with a relatively strong recovery in most Asian economies. The tanker market, however, trended lower in 1999, due to escalating oil prices and falling refining margins. Profit after tax for 1999 increased by 25 per cent., assisted by a strong performance by the feeder and breakbulk liner services division. Together with the surplus on disposal of shipowning subsidiaries and the sale of individual vessels, it more than compensated for the fall in profits registered by the brokerage and freight trading sectors. 15

16 With newbuilding prices at an historical low in 1999, the Group and its associates took advantage of this and contracted to build 10 new vessels. FY2000 Group turnover increased 51 per cent. as compared to 1999 due largely to increased activity in freight trading and feeder/breakbulk services. Freight trading profits, however, were lower due to a provision for claims of S$5,024,000. This amount has been provided for in the consolidated financial statements for FY2000 which are attached as Appendix IV of the Circular (refer to note 26). Profit after tax attributable to the shareholders increased 27 per cent. largely due to the substantial increase in profit of a shipowning associate and the feeder/breakbulk services. The dry bulk freight market improved during the year in line with strong world economic growth. The tanker market achieved substantial improvement from the second quarter onwards recording the highest freight rates since 1973 due largely to increased oil production and greater demand for modern double hull tonnage following the Erika oil spill. PCL s associated companies took delivery of 6 newbuildings ordered in the previous year of which 2 were sold realising a profit of S$9,771,000 for the Group. As at 31 December 2000 the PCL Group had net assets of S$365.2 million. The PCL Group achieved profit after taxation of S$52.7 million representing a S$11.2 million or 27 per cent. increase from S$41.5 million recorded in The improvement in earnings was attributable to higher contribution from feeder and breakbulk liner services and S$9.8 million in profits realised from the sale of 2 vessels. Prospects In the announcement of the PCL Group s results for FY2000, the Directors of PCL expressed the view that high oil prices, a general slowdown in the world economy and the resultant drawdown on inventory build up in the year 2000 will pose a drag on world trade and shipping demand. Given these factors and the increased newbuilding deliveries in 2001, particularly in dry bulk vessels, dry bulk freight rates are expected to trend lower across the industry. The Directors of PCL are of the view that tanker rates have peaked in the early part of However, the possible imposition of new regulations governing over-aged single hull tankers will mitigate any substantial fall in tanker rates. The PCL Group expects to take delivery of 5 new vessels over 2001/2002 and the deployment of these vessels will contribute to the performance of the Group. For FY2001, the Directors of PCL expect lower profits after tax but not materially below that for FY INTENTION OF THE OFFEROR AND REASON FOR THE OFFER The following paragraphs on the reasons for the Offer and the intention of the Offeror have been extracted from the Offer Document unless otherwise stated. The full text of the Offeror s reasons for the Offer and its intentions for PCL can be found on pages 16 to 17 of the Offer Document. Shareholders are advised to read those pages carefully. The Offer is being made by the Offeror for the purposes of acquiring the entire issued share capital of PCL and delisting PCL from the Main Board of the SGX-ST. However, as at the Latest Practicable Date there is no certainty that PCL will be delisted. Whether or not the Offer becomes or is declared unconditional, it is the intention of the Offeror that in the near term the PCL Group will continue to operate as a separate entity after the Offer. The Offeror currently has no plans for any redeployment of the PCL Group s fixed assets, the discontinuance of the employment of the existing employees of the PCL Group or to introduce other major changes to the PCL Group s business. 16

17 The reasons for the Offer are as follows:- Market Performance of the Shares The closing price of the Shares on 14 March 2001, being the Market Day immediately prior to the Announcement, was S$0.89, a decrease of 48.0 per cent. from its closing price of S$1.71 on 10 July 1990, being the first trading day on which the Shares were listed on the SGX-ST. This is in sharp contrast to the financial performance and stock market performance over that period as follows:- l net assets of the Group have increased by 21.1 per cent. from S$301.6 million as at 31 December 1990 to S$365.2 million as at 31 December l profit after tax of the Group has increased by 87.5 per cent. from S$28.1 million as at 31 December 1990 to S$52.7 million as at 31 December l the Straits Times Index has increased by 41.8 per cent. from as at 10 July 1990 to as at 14 March Trading Volume of the Shares The average daily trading volume of the Shares for the last 12 months prior to the date of the Announcement was 75,903. Notwithstanding that approximately million Shares or 61.3 per cent. of the issued share capital of PCL comprises free float, there has been a lack of liquidity in the trading of the Shares on the SGX-ST. The Offeror believes that this lack of liquidity has resulted in little research coverage for PCL and has in turn contributed to the under-performance of the Shares. No Need to Access Equity Capital Markets The Group has in the past relied primarily on internal sources to fund its operations. The Group expects to continue funding its operations through cashflow from its operations and does not expect that it will require access to the equity capital markets to fund future growth. Ability for Shareholders to Realise Investment The Basic Offer Price represents:- l a premium of 40.4 per cent. over the last traded price of the Shares prior to the Announcement l l a premium of 39.8 per cent. over S$0.894, the weighted average of the last traded prices of the Shares for the 3 months prior to the Announcement a premium of 44.5 per cent. over S$0.865, the weighted average of the last traded prices of the Shares for the 12 months prior to the Announcement The Enhanced Offer Price represents:- l a premium of 57.3 per cent. over the last traded price of the Shares prior to the Announcement l l a premium of 56.6 per cent. over S$0.894, the weighted average of the last traded prices of the Shares for the 3 months prior to the Announcement a premium of 61.8 per cent. over S$0.865, the weighted average of the last traded prices of the Shares for the 12 months prior to the Announcement In the last 5 years prior to the date of the Announcement, the Shares have not traded beyond the Basic Offer Price except for certain days in June, July and November Over the same 5- year period, the Shares have not traded above the Enhanced Offer Price except on 2 and 5 July 1999, when it traded to a high of S$1.47 on both these dates. 17

18 Having reviewed and considered the reasons for the Offer and the intentions of the Offeror with regard to the future of PCL, we wish to draw to the attention of Shareholders the following:- (i) the Offer Document states that it is the intention of the Offeror to make PCL its whollyowned subsidiary. It is therefore not the intention of the Offeror to preserve the listing status of the Company. Accordingly, the Offeror will exercise its rights of compulsory acquisition under Section 215(1) of the Act and, in the event that it is entitled to do so following the close of the Offer with control of not less than 90 per cent. of the issued and paid up share capital of PCL, dissenting Shareholders should note that their Shares will be compulsorily acquired by the Offeror even though they have not accepted the Offer unless, on an application made by a dissenting Shareholder, the Court orders otherwise. In the event the Offeror acquires less than 90 per cent. of the issued and paid up share capital pursuant to the Offer and is not entitled to compulsorily acquire the shares under Section 215(1) of the Act but has an aggregate shareholding (together with its concert parties) of not less than 75 per cent., the Offeror intends to procure PCL to convene an EGM to approve a resolution to delist PCL pursuant to Clause 208 of the SGX-ST Listing Manual. The resolution to delist the Company at the EGM would need to be approved by a majority of at least 75 per cent. in nominal value of Shares held by Shareholders present and voting (which would include the Offeror s interest if it votes on the resolution) and must not be voted against by 10 per cent. or more in the nominal value of Shares held by such Shareholders present and voting. In this respect, Shareholders should note that Clause 208(2)(d) of the SGX-ST Listing Manual requires a reasonable exit alternative, which should normally be in cash, to be offered to the Shareholders. However, under Rule 34(2) of the Code, the Offeror will not be able to offer a cash exit offer higher than the final offer price for each Share, without the consent of the SIC, if the Offeror should decide to seek a delisting of PCL within 6 months of the close of the Offer; (ii) (iii) (iv) if the Shares are suspended or delisted, as the case maybe, there will not be an orderly public market for the Shares. It is also common for shares of non-listed companies to trade at discounts to the valuation of comparable listed companies. The Offer therefore presents an opportunity for Shareholders to realise their potentially illiquid investment under either Section 215(1) of the Act or Clause 208 of the SGX-ST Listing Manual. However, as at the Latest Practicable Date there is no certainty that PCL will be delisted; in the event that PCL is delisted pursuant to Clause 208 of the SGX-ST Listing Manual, PCL will not be subject to the reporting or regulatory requirements as required of listed companies under the SGX-ST Listing Manual; and as at the Latest Practicable Date, there is no publicly available evidence of an alternative offer for the Shares from a third party. 7. FINANCIAL ASSESSMENT OF THE OFFER In assessing the fairness or otherwise of the Offer, we have considered the following factors: (i) PCL s Adjusted NTA; (ii) (iii) (iv) (v) premia over / (discounts to) implied by the Basic Offer Price and the Enhanced Offer Price compared to the premia over / (discounts to) the adjusted NTA of completed takeover transactions in Singapore; recent comparable transactions in relation to the shipping sector; premia over / (discounts to) the last traded price of the Shares prior to the Announcement implied by the Basic Offer Price and the Enhanced Offer Price as compared to the last traded price prior to the announcements of recent takeover transactions that have been completed in Singapore; price to NTA of listed companies considered comparable to PCL; 18

19 (vi) (vii) (viii) (ix) EV to EBITDA, Price to EBITDA and PER of listed companies considered comparable to PCL; market quotations; comparative performance of the Shares and performance of listed companies considered comparable to PCL; and dividends. In addition, we would like Shareholders to note that for the purposes of the financial assessment of the Offer, we have:- (1) used exchange rates as at the Latest Practicable Date sourced from Bloomberg; (2) assumed the number of Shares in issue to be 300,000,000, being the Shares issued as at the Latest Practicable Date unless otherwise stated; and (3) considered Shares on a fully diluted basis representing 305,626,000 Shares assuming the 5,626,000 Options outstanding as at the Latest Practicable Date are alloted and issued fully paid pursuant to the valid exercise of Options under the ESOS. (i) PCL s Adjusted NTA Based on the audited consolidated balance sheet of the Group as at 31 December 2000 the audited consolidated NTA of the Group is approximately S$365.2 million. The Basic Offer Price, adjusted for the dividend declared of 6 cents in respect of FY2000, represents:- (a) a discount of approximately 2.3 per cent. to the consolidated NTA per Share of approximately S$1.22 based on the 300,000,000 Shares in issue as at 31 December 2000; or (b) a discount of approximately 1.7 per cent. to the consolidated NTA per Share of approximately S$1.21 based on the 305,626,000 Shares in issue on a fully diluted basis. The Enhanced Offer Price, adjusted for the dividend declared of 6 cents in respect of FY2000, represents:- (a) a premium of approximately 9.8 per cent. to the consolidated NTA per Share of approximately S$1.22 based on the 300,000,000 Shares in issue as at 31 December 2000; or (b) a premium of approximately 10.7 per cent. to the consolidated NTA per Share of approximately S$1.21 based on the 305,626,000 Shares in issue on a fully diluted basis. As at 31 December 2000, the Group had a net cash and cash equivalents position of approximately S$115.2 million (representing approximately S$0.38 per Share based on 300,000,000 Shares in issue as at 31 December 2000). In connection with the Offer, the Directors have commissioned Braemar Valuations Limited to conduct a valuation of the bulk carriers, tankers and container vessels owned by the PCL Group and its associated companies (the Fleet ), and Knight Frank Pte Ltd to conduct a valuation of the property at 111 North Bridge Road, #26-01/02/03/04, Peninsula Plaza, Singapore (the Property ). The Fleet has been valued on the basis of charterfree deliveries between willing buyers and willing sellers. The Property held by the Group has been valued on an open market value basis. The respective valuers certificates are set out in Appendix V to this Circular. 19