TT INTERNATIONAL LIMITED Company Registration Number D (Incorporated in Singapore)

Transcription

1 TT INTERNATIONAL LIMITED Company Registration Number D (Incorporated in Singapore) ANNOUNCEMENT EXECUTION OF THE INVESTMENT FRAMEWORK AGREEMENT 1. INTRODUCTION 1.1 The Board of Directors of TT International Limited (the "Company") refers to the announcement made on 4 January 2012 in relation to the heads of agreement that the Company entered into with Lucrum Development (Singapore) Pte. Ltd. ("LD ), relating to LD's proposed investment in Big Box Pte. Ltd. ("BB") for the purposes of the development of the plot of land described in paragraph 2.1 below. 1.2 Further to the above, the Company would like to inform its shareholders ("Shareholders") that the Company, BB, LD and Lucrum Capital Pte. Ltd. ("LC"), the holding company of LD (the Company, BB, LD and LC collectively, the "Parties") have, on 4 April 2012, entered into an investment framework agreement (the "Investment Framework Agreement"). 2. PRINCIPAL TERMS OF THE INVESTMENT FRAMEWORK AGREEMENT 2.1 Transfer of the Property by the Company and Grant of Shares and Share Options by BB Pursuant to the terms of the Investment Framework Agreement, and upon the satisfaction of certain conditions, the Company will on the date of completion of the Investment Framework Agreement ("Completion Date") assign to BB its interest in the plot of land at Jurong East Street 11 (the "Property") held by the Company under a building agreement dated 16 October 2008 that the Company entered into with the Jurong Town Corporation. BB shall, on the Completion Date, allot and issue to the Company (i) 508 fully paid up ordinary shares at an issue price of S$1.00 per ordinary share payable in cash; and (ii) 95,000,000 redeemable preference shares ("RPS") in consideration of the assignment of the Company's interest in the Property. 2.2 Issue of Share and Share Options by BB to LD According to the terms of the Investment Framework Agreement, BB will, on Completion Date, (i) allot and issue to LD one (1) fully paid up ordinary share at an issue price of S$1.00 per ordinary share; and (ii) grant to LD 489 ordinary share options (each exercisable into one (1) ordinary share) and 92,000,000 RPS options (each exercisable into one (1) RPS) (collectively the "Share Options"). The exercise price for each Share Option shall be S$1 ("Exercise Price"). The terms of the exercise of the Share Options are set out below. 2.3 Medium Term Note Programme Subject to the terms and conditions of the Investment Framework Agreement: (i) Upon completion, BB will issue up to S$200 million in aggregate principal amount ("Committed Funds") of 12% secured notes (the "Notes") under a Medium Term Note Programme ("MTN Programme") to be established by BB;

2 (ii) (iii) (iv) (v) (vi) LC and LD have jointly and severally agreed to subscribe for or to procure the subscription by third parties of the Notes in full; under the MTN Programme, it is expected that the Notes will be issued in tranches, the first tranche being a fixed tranche of S$50 million which will be issued and subscribed for on the Completion Date. BB may issue a further five (5) fixed tranches of S$30 million per tranche over a period of 24 months commencing from the Completion Date; BB will redeem each Note at 100 per. cent (100%) of its principal amount together with any unpaid accrued interest on the date falling three (3) calendar years after the date of issue of each Note, unless previously redeemed or purchased and cancelled. BB will have certain rights of early redemption or repurchase of the Notes; the MTN Programme shall be secured over all of BB's assets, present and future, on such terms and conditions as may be agreed amongst the Parties; and The Committed Funds will be utilised by BB for construction costs and related expenses to complete the construction and development of the Property. The Parties will use all reasonable commercial endeavours to agree on and finalise the definitive documentation for the MTN Programme by no later than 15 May 2012 (or such later date as the Parties may agree). 2.4 Guarantee Under the Investment Framework Agreement, LC guarantees the performance by LD of all undertakings, covenants, agreements and obligations of LD in the Investment Framework Agreement (and other agreements referred to therein). 2.5 Exercise of the Share Options by LD (c) The Share Options will vest in LD progressively in direct proportion to the principal amount of Notes subscribed and paid for, and in the event that the Committed Funds are not drawn down in full by BB on or before (i) the date the temporary occupation permit has been issued in respect of the development of the Property ("TOP"); or (ii) the date of full repayment of all prevailing outstanding principal amounts and interests under the MTN Programme, whichever is the earlier ("Final Vesting Date") the balance unvested Share Options will vest in full on the Final Vesting Date, unless there is any default by LC and/or LD in procuring the subscription of the Notes or in subscribing for any tranche of the Notes under the terms of the MTN Programme. LD will be entitled to exercise such Share Options from the date of vesting of the Share Options up to and including the date of full repayment of all prevailing outstanding principal amounts and interests and other amounts payable of the outstanding Notes under the MTN Programme, by paying the Exercise Price. Assuming that LD exercises its Share Options in full, it will hold 49% of the total issued ordinary and issued RPS share capital of BB. The remaining 51% of the issued share capital of BB will be held by the Company.

3 2.6 Trade Sale In the event of a trade sale of all of the Company's assets or a sale of the Property, the Parties agree to a formula for sharing the trade sale surplus determined in accordance with the Investment Framework Agreement. The Investment Framework Agreement also provides for a right on the part of LD to put its shares to the Company in the event that the trade sale does not proceed, subject to certain conditions. 2.7 Conditions Precedent Completion of the Investment Framework Agreement is conditional upon the satisfaction or waiver by 30 June 2012 (or such other date as the Parties may agree in writing) of inter alia the following conditions precedent: (c) (d) (e) (f) necessary regulatory approvals being obtained from the relevant authorities for the Relevant Transactions; necessary approval of shareholders of LD in relation to the transactions contemplated in the Investment Framework Agreement ("Relevant Transactions"); necessary approval of the Shareholders in relation to the Relevant Transactions, or the written waiver/clarification from the Singapore Exchange Securities Trading Limited ("SGX-ST") that approval of the Shareholders is not required (as the case may be); approval by the scheme creditors ("Scheme Creditors") of the Company in relation to the scheme of arrangement of the Company ("Scheme"), on certain terms more particularly specified in the Investment Framework Agreement ("Scheme Creditors' CP") ; satisfactory outcome of due diligence carried out by LD inter alia on the Property; and the execution of all necessary documentation relating to the MTN Programme and the receipt by the Company of reasonable evidence of LD to sufficient funds to enable LD to subscribe for or procure the subscription of the first tranche of the Notes. Any Party shall be entitled to terminate the Investment Framework Agreement seven (7) Business Days (as defined in the Investment Framework Agreement) after the Company fails to obtain the approval of the Scheme Creditors at a Scheme Creditors' meeting on the terms specified in the Scheme Creditors' CP, unless LD within such seven day period grants a written waiver of the Scheme Creditors' CP. 3. INVESTORS AGREEMENT AND LEASE In connection with and pursuant to the terms of the Investment Framework Agreement, the Parties will also enter into an investors agreement (the "Investors Agreement") upon completion under the Investment Framework Agreement to regulate the affairs of BB and the respective rights and obligations of the Company and LD as investors and/or shareholders in BB, and the Company and BB will also enter into a lease (the "Lease") concurrently with the issuance of TOP under which the Company will lease the Property from BB for an initial term of 20 years with an option to renew on terms set out in the Lease. The agreed forms of the Investors Agreement and Lease (in the case of the Lease, subject only to agreement between

4 the Company, BB and LD on the determination of the net excess business revenue generated and received by the Company from its use of the Property over and above the annual gross rental) are attached to the Investment Framework Agreement. 4. RATIONALE FOR THE RELEVANT TRANSACTIONS 4.1 By entering into the Investment Framework Agreement, the Company will have access to the necessary funds to complete the construction and development of the Property. The Property when developed will be the regional headquarters of the Company and its subsidiaries (collectively, the "Group") housing its various businesses and operations under one roof with a key focus on setting up a regional training centre for the Company s core retail business via its flagship warehouse retail store on the Property, and over the long term, enhancing the Company's core businesses. 4.2 BB is presently a dormant company with nominal share capital wholly-owned by the Company. After completion under the Investment Framework Agreement, BB will become an investment holding company, holding the Property as its principal asset which will be leased to the Company under the Lease. 5. CHAPTER 10 OF THE LISTING MANUAL 5.1 Chapter 10 of the Listing Manual ("Listing Manual") of the SGX-ST governs the continuing listing obligations of listed companies in respect of acquisitions and disposals. Although the Relevant Transactions under the Investment Framework Agreement are not strictly a disposal by the Company (as the Company is divesting the Property to BB which is its subsidiary), with the Company initially holding almost all of the issued shares of BB, in essence the Investment Framework Agreement will result in the Property being owned by BB, the share capital of which may in turn be 49% owned by LD, the Company is making an announcement relating to the Investment Framework Agreement which is compliant with Chapter 10 of the Listing Manual, based on a divestment of a 49% interest in the Property (the "Divestment"). The relative figures applicable in respect of the Divestment computed on the bases as set out in Rule 1006 of the Listing Manual and based on the latest announced unaudited consolidated accounts of the Group for the three (3) months ended 31 December 2011 are as follows: (c) Net asset value of the assets disposed of, compared with the Group's net asset value Net profits attributable to the assets disposed of, compared with the Group's net profits Aggregate value of the consideration received 3, compared with the Company's market capitalisation based on the total number of issued shares excluding treasury shares as at 3 April 2012, being the market day preceding the date of the Investment Framework Agreement Not meaningful 1 Not applicable 2 221% 1 The Company is in negative asset value. 2 There are no net profits attributable to the assets disposed of as the Property is presently not developed. 3 For the purposes of this relative figure, we have taken the consideration to be S$92 million.

5 (d) The number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue Not applicable 5.2 As one or more of the relative figures computed on the bases set out above exceed 20 per cent. (20%), the Divestment constitutes a major transaction for the purposes of the Listing Manual. Accordingly, the Divestment will be subject to the approval of Shareholders in general meeting, unless otherwise waived by the SGX-ST. 6. FINANCIAL EFFECTS OF THE DIVESTMENT 6.1 Assumptions For illustrative purposes only, the financial effects of the Divestment on the earnings per share and net tangible assets ("NTA") per share of the Company, for the most recently completed financial year of the Company, being the financial year ended 31 March 2011 ("FY2011"), are set out below. The financial effects stated below are based on the following assumptions: the effect of the Divestment on the earnings per share of the Company is computed assuming that the Divestment had been effected on 1 April 2010 being the first day of FY2011; and the effect of the Divestment on the NTA per share of the Company is computed assuming that the Divestment had been effected on 31 March 2011 being the last day of FY2011. The financial effects stated below are neither indicative of the actual financial effects of the Divestment on the earnings per share and NTA per share of the Company, nor are they indicative of the financial performance of the Group for the financial year ended 31 March Financial effects: Effect on earnings per share Not Applicable. There are no net profits attributable to the assets disposed of as the Property is presently not developed. Effect on NTA per share Assuming that the divestment has been effected on 31 March 2011, there is no effect on the Group s NTA per share. 6.3 The total costs and expenses incurred by the Company in relation to the Property as at the date of the Investment Framework Agreement amount to approximately S$95 million, of which approximately S$88 million has been capitalised as the book value of the Property in the Group's financial statements for FY2011. This S$88 million amount forms part of the S$95 million which the Company will inject into BB as the subscription price for its RPS. The total proceeds from the Parties subscription for their respective RPS, upon LD's exercise of its Share Options, will result in an enlarged share capital of BB of S$187 million. These proceeds will, however, not be received by the Company but will only be injected into BB in the form of the subscription price for the RPS. The excess of the proceeds over the book value will have

6 no financial impact on the Company, save for the approximately S$7 million net expenses not capitalised as the book value of the Property in the Group's financial statements for FY The 49% interest in the Property is valued at approximately S$92 million, based on the latest available independent valuation of the Property undertaken as at 31 August 2011 by Jones Lang LaSalle Property Consultants Pte Ltd (an independent valuer appointed by the Company) on an "as is, where is" basis under the Warehouse Retail Scheme at a gross plot ratio of The consideration for the Divestment (essentially in the form of the Exercise Price for the Share Options granted to LD) is based on the valuation of the Property set out in paragraph 6.4 above. 7. INTEREST OF DIRECTORS AND CONTROLLING SHAREHOLDERS None of the directors or controlling shareholders of the Company has any interest, direct or indirect in the Divestment, other than as shareholders of the Company. 8. DOCUMENTS AVAILABLE FOR INSPECTION A copy of the Investment Framework Agreement and the valuation report by Jones Lang LaSalle Property Consultants Pte Ltd will be made available for inspection during normal business hours at the registered office of the Company for a period of three (3) months from the date of this Announcement. By Order of the Board Koh Sock Tin Company Secretary 5 April 2012