HUBLINE BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act, 1965)

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad has not perused the contents of this Circular prior to its issuance and takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. HUBLINE BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO HOLDERS OF WARRANTS B IN RELATION TO THE PROPOSED AMENDMENTS TO THE TERMS OF THE DEED POLL DATED 12 NOVEMBER 2015 CONSTITUTING THE OUTSTANDING WARRANTS 2015/2020 AND NOTICE OF EXTRAORDINARY GENERAL MEETING OF WARRANTS B HOLDERS Principal Adviser (A Participating Organisation of Bursa Malaysia Securities Berhad) The Notice of Extraordinary General Meeting of Warrants B holders ( EGM ) of Hubline Berhad ( Hubline ) to be held at Dewan Perpaduan II, 1st Floor, Merdeka Palace Hotel & Suites, Jalan Tun Abang Haji Openg, Kuching, Sarawak on Tuesday, 10 January 2017 at a.m. or immediately after the conclusion of the Extraordinary General Meeting of Warrants A holders which will be held at a.m. on the same day and at the same venue, whichever is later, or any adjournment thereof, together with the Form of Proxy are enclosed with this Circular. In the event of the EGM being adjourned, the adjourned EGM will be held at Dewan Perpaduan II, 1st Floor, Merdeka Palace Hotel & Suites, Jalan Tun Abang Haji Openg, Kuching, Sarawak on Tuesday, 17 January 2017 at a.m. or immediately after the conclusion of the adjourned Extraordinary General Meeting of Warrants A holders which will be held at a.m. on the same day and at the same venue, whichever is later ( Adjourned EGM ). You are entitled to attend and vote at the EGM or the Adjourned EGM or appoint a proxy or proxies to attend and vote on your behalf. If you wish to do so, you may deposit the Form of Proxy at Hubline s registered office at Wisma Hubline, Lease 3815 (Lot 10914) Section 64 KTLD, Jalan Datuk Abang Abdul Rahim, Kuching, Sarawak, not less than forty-eight (48) hours before the time and date stipulated for the EGM or the Adjourned EGM respectively. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM or the Adjourned EGM, should you subsequently wish to do so. Last day, date and time for lodging the Form of Proxy for EGM : Sunday, 8 January 2017 at a.m Last day, date and time for lodging the Form of Proxy for Adjourned EGM : Sunday, 15 January 2017 at a.m. This Circular is dated 19 December 2016

2 DEFINITIONS Except where the context otherwise requires, the following definitions shall apply throughout this Circular: ACPAM : Advance Capital Partners Asset Management Pte Ltd Act : Companies Act, 1965, as amended from time to time including any reenactment thereof AOF I or Subscriber : Advance Opportunities Fund I Board : Board of Directors of Hubline Bursa Securities : Bursa Malaysia Securities Berhad Circular : This circular to the Warrants B Holders of Hubline in relation to the Proposed Warrants B Deed Poll Amendment dated 19 December 2016 Conversion Price : The price at which each Conversion Share shall be issued upon conversion of the Notes Conversion Shares : New Hubline Shares arising from the conversion of the Notes Hubline or Company : Hubline Berhad (23568-H) Hubline Group or Group : Hubline and its subsidiaries, collectively Hubline Share(s) : Existing ordinary shares of RM0.01 each in Hubline EGM : Extraordinary general meeting of Warrants B Holders FYE : Financial year ended/ending, as the case may be Kenanga IB : Kenanga Investment Bank Berhad (15678-H) Listing Requirements : Main Market Listing Requirements of Bursa Securities LPD : 22 November 2016, being the latest practicable date prior to the printing of this Circular MA : Memorandum of Association of Hubline Market Day : Any day between Monday and Friday (inclusive of both days) which is not a public holiday and on which Bursa Securities is open for the trading of securities Maturity Date : Five (5) years from the closing date of the first sub-tranche of Tranche 1 Notes New Hubline Share(s) : Ordinary shares of RM0.10 each in Hubline subsequent to the Proposed Capital Restructuring Noteholders : Holders of the Notes Notes : Redeemable convertible notes Official List : A list specifying all securities listed on the Main Market of Bursa Securities Proposals : Proposed Capital Restructuring and Proposed Notes Issue, collectively Proposed Capital Restructuring Proposed Deed Poll Amendment Proposed Warrants A Deed Poll Amendment : Proposed Par Value Reduction, Proposed Share Consolidation and Proposed MA Amendment, collectively : Proposed Warrants A Deed Poll Amendment and Proposed Warrants B Deed Poll Amendment, collectively : Proposed amendments to the terms of the Warrants A Deed Poll i

3 DEFINITIONS (Cont d) Proposed Warrants B Deed Poll Amendment Proposed Par Value Reduction Proposed Share Consolidation : Proposed amendments to the terms of the Warrants B Deed Poll : Proposed reduction of the issued and paid-up share capital of Hubline pursuant to Section 64 of the Act involving the cancellation of RM0.005 of the par value of each Hubline Share : Proposed share consolidation of all existing Hubline Shares upon the completion of the Proposed Par Value Reduction, on the basis of twenty (20) ordinary shares of RM0.005 each in Hubline after the Par Value Reduction into one (1) ordinary share of RM0.10 each in Hubline Proposed Notes Issue : Proposed issuance of Notes with an aggregate principal amount of up to RM80.0 million RM and sen : Ringgit Malaysia and sen respectively, being the lawful currency of Malaysia Subscription Agreement : A conditional subscription agreement dated 18 July 2016 entered into between Hubline, the Subscriber and ACPAM in relation to the Proposed Notes Issue Supplemental Agreement : A supplemental agreement dated 18 November 2016 entered into between Hubline, the Subscriber and ACPAM, whereby the parties have mutually agreed to vary and amend some of the terms of the Subscription Agreement. Warrants A : Warrants 2009/2019 issued by Hubline Warrants B : Warrants 2015/2020 issued by Hubline Warrants A Holder(s) : Holders of the existing Warrants A Warrants B Holder(s) : Holders of the existing Warrants B Warrants A Deed Poll : Deed poll dated 28 September 2009 constituting Warrants A and supplemental deed polls dated 20 January 2012 and 3 September 2012 issued by the Company in relation to Warrants A Warrants B Deed Poll : Deed poll dated 12 November 2015 constituting Warrants B All references to you in this Circular are references to holders of Warrants B of Hubline. Words denoting the singular shall, where applicable, include the plural and vice versa. Words denoting the masculine gender shall, where applicable, include the feminine and/or neuter genders and vice versa. References to persons shall include corporations. Any reference to any enactment in this Circular is a reference to that enactment as for the time being amended or re-enacted. Any reference to a time of day in this Circular is a reference to Malaysian time, unless otherwise specified. ii

4 TABLE OF CONTENTS LETTER FROM THE BOARD TO THE WARRANTS B HOLDERS OF HUBLINE IN RELATION TO THE PROPOSED WARRANTS B DEED POLL AMENDMENT CONTAINING: SECTION PAGE 1. INTRODUCTION 1 2. DETAILS OF THE PROPOSED WARRANTS B DEED POLL AMENDMENT 2 3. RATIONALE FOR THE PROPOSED WARRANTS B DEED POLL AMENDMENT 7 4. PROSPECTS OF THE GROUP 8 5. EFFECTS OF THE PROPOSED WARRANTS B DEED POLL AMENDMENT 9 6. HISTORICAL WARRANTS B AND HUBLINE SHARE PRICES 9 7. APPROVALS REQUIRED INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM DIRECTORS RECOMMENDATION CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION ESTIMATED TIMEFRAME FOR COMPLETION EGM FURTHER INFORMATION 12 APPENDIX APPENDIX I INFORMATION ON THE PROPOSALS 13 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED iii

5 HUBLINE BERHAD (Company No H) (Incorporated in Malaysia under the Companies Act, 1965) Registered Office Wisma Hubline Lease 3815 (Lot 10914) Section 64 KTLD Jalan Datuk Abang Abdul Rahim Kuching, Sarawak 19 December 2016 Board of Directors Dato Richard Wee Liang Richard Wee Liang Chiat (Non-Independent Non-Executive Chairman) Dennis Ling Li Kuang (Chief Executive Officer / Managing Director) Katrina Ling Shiek Ngee (Executive Director) Tuan Haji Ibrahim Bin Haji Baki (Independent Non-Executive Director) Lai Lian Yee (Independent Non-Executive Director) Jem Magnaye (Non-Independent Non-Executive Director) To: The Warrants B Holders of Hubline Berhad Dear Sir/Madam, PROPOSED WARRANTS B DEED POLL AMENDMENT 1. INTRODUCTION On 18 July 2016, Kenanga IB had, on behalf of the Board, announced that the Company proposes to undertake the Proposed Warrants B Deed Poll Amendment. In the same announcement, the Company also proposed to undertake the following: i. reduction of the issued and paid-up share capital of Hubline pursuant to the Act involving the cancellation of RM0.005 of the par value of each existing ordinary share of RM0.010 in Hubline; ii. iii. iv. consolidation of all the existing Hubline Shares upon completion of the Proposed Par Value Reduction on the basis of twenty (20) ordinary shares of RM0.005 each in Hubline into one (1) new ordinary share of RM0.10 each in Hubline; amendment to the MA of Hubline to facilitate the Proposed Par Value Reduction and Proposed Share Consolidation; amendment to the terms of the Warrants A Deed Poll; and 1

6 v. issuance of redeemable convertible notes with an aggregate principal amount of up to RM200.0 million On 18 November 2016, Kenanga IB had, on behalf of the Board, announced that the Company has entered into the Supplemental Agreement on the following: (i) (ii) to revise the aggregate principal amount of the Notes from RM200.0 million to RM80.0 million; and the minimum conversion price in relation to the Conversion Shares to be set at RM0.05 upon the implementation of the Companies Act, As at the LPD, the Company has 3,079,077,387 outstanding Warrants B yet to be exercised, which are constituted by the deed poll dated 12 November Pursuant to the Proposed Capital Restructuring, the Company is proposing to amend certain provisions of the Warrants B Deed Poll to allow for adjustments to be made to the exercise price and the number of warrants held by the Warrants B Holders as set out in the ensuing sections. Rationale for the Proposed Warrants B Deed Poll Amendment is set out in Section 3 herein. THE PURPOSE OF THIS CIRCULAR IS TO PROVIDE YOU WITH DETAILS OF THE PROPOSED WARRANTS B DEED POLL AMENDMENT AND TO SEEK YOUR APPROVAL FOR THE RESOLUTION PERTAINING TO THE PROPOSED WARRANTS B DEED POLL AMENDMENT TO BE TABLED AT THE FORTHCOMING EGM. THE NOTICE OF THE FORTHCOMING EGM AND THE FORM OF PROXY ARE ENCLOSED IN THIS CIRCULAR. YOU ARE ADVISED TO READ AND CAREFULLY CONSIDER THE CONTENTS OF THIS CIRCULAR TOGETHER WITH THE APPENDICES CONTAINED HEREIN BEFORE VOTING ON THE RESOLUTION PERTAINING TO THE PROPOSED WARRANTS B DEED POLL AMENDMENT TO BE TABLED AT THE FORTHCOMING EGM. 2. DETAILS OF THE PROPOSED WARRANTS B DEED POLL AMENDMENT The Proposed Warrants B Deed Poll Amendment involves amendments of the terms set out in the Warrants B Deed Poll which will be affected by way of the Supplemental Warrants B Deed Poll to be executed by the Company. 2.1 Amendments to the Warrants B Deed Poll Reference of the provision Third Schedule Condition 3(A)(i) Existing provision in the Warrants B Deed Poll alteration of the share capital of the Company by reason of the consolidation or subdivision of shares or capital reduction exercises; Proposed Amendments to the existing provision in the Warrants B Deed Poll alteration of the share capital of the Company by reason of the consolidation or subdivision or conversion of shares or capital reduction exercises; 2

7 Reference of the provision Third Schedule Condition 3(E) Fourth Schedule Clause I Existing provision in the Warrants B Deed Poll An adjustment to the number of Additional Warrants to be issued to each Warrant Holder will be rounded downwards or upwards as the Company may at its sole and absolute discretion determine to the nearest whole Warrant B and in no event will any adjustment be made to reduce the number of Warrants B that a Warrant Holder already holds. However, no additional issue of Warrants B will be made unless approval inprinciple has been granted by Bursa Securities and any relevant authorities for the listing of and quotation for such Additional Warrants to be issued as a result of such adjustment and such additional new Ordinary Shares to be issued on the exercise of any of such Additional Warrants. An adjustment to the number of Additional Warrants to be issued to each Warrant Holder will be rounded downwards or upwards as the Company may at its sole and absolute discretion determine to the nearest whole Warrant B and in no event will any adjustment be made to reduce the number of Warrants B that a Warrant Holder already holds. However, no additional issue of Warrants B will be made unless approval inprinciple has been granted by Bursa Securities and any relevant authorities for the listing of and quotation for such Additional Warrants to be issued as a result of such adjustment and such additional new Ordinary Shares to be issued on the exercise of any of such Additional Warrants. Proposed Amendments to the existing provision in the Warrants B Deed Poll An adjustment to the number of Additional Warrants to be issued to each Warrant Holder will be rounded downwards or upwards as the Company may at its sole and absolute discretion determine to the nearest whole Warrant B and in no event will any adjustment be made to reduce the number of Warrants B that a Warrant Holder already holds. However, no additional issue of Warrants B will be made unless approval inprinciple has been granted by Bursa Securities and any relevant authorities for the listing of and quotation for such Additional Warrants to be issued as a result of such adjustment and such additional new Ordinary Shares to be issued on the exercise of any of such Additional Warrants. An adjustment to the number of Additional Warrants to be issued to each Warrant Holder will be rounded downwards or upwards as the Company may at its sole and absolute discretion determine to the nearest whole Warrant B and in no event will any adjustment be made to reduce the number of Warrants B that a Warrant Holder already holds. However, no additional issue of Warrants B will be made unless approval inprinciple has been granted by Bursa Securities and any relevant authorities for the listing of and quotation for such Additional Warrants to be issued as a result of such adjustment and such additional new Ordinary Shares to be issued on the exercise of any of such Additional Warrants. 3

8 Reference of the provision Fifth Schedule Clause 4 Existing provision in the Warrants B Deed Poll If within thirty (30) minutes after the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Warrant Holders shall be dissolved. In any other case it shall stand adjourned to the same day in the next week at the same time and place or to such other time and place as may be appointed by the Chairman and at such adjourned meeting two (2) persons being Warrant Holders present in person or by proxy whatever number of unexercised Warrants so held, shall be a quorum for the transaction of business including the passing of Special Resolutions. At least fourteen (14) days notice (exclusive as aforesaid) of any adjourned meeting of Warrant Holders at which a Special Resolution is to be proposed shall be given in the same manner as for an original meeting and such notice shall subject to paragraph 3 above, state that two (2) persons being Warrant Holders present in person or by proxy at the adjourned meeting whatever the number of Warrants B held by them will form a quorum. Proposed Amendments to the existing provision in the Warrants B Deed Poll If within thirty (30) minutes after the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Warrant Holders shall be dissolved. In any other case it shall stand adjourned to such day and time being not less than seven (7) days nor more than twenty eight (28) days thereafter and at such place as may be appointed by the Chairman and at such adjourned meeting two (2) persons being Warrant Holders present in person or by proxy whatever number of unexercised Warrants so held, shall be a quorum for the transaction of business including the passing of Special Resolutions and at least seven (7) days notice of any adjourned meeting shall be given in the same manner as for an original meeting and such notice shall state that two (2) persons being Warrant Holders present or by proxy at the adjourned meeting whatever the number of Warrants B held by them will form a quorum. Fourth Schedule Any references to additional number of Warrants B to be issued shall be revised to number of Warrants B to be adjusted. Any references to additional number of Warrants B which a Warrant Holder may be entitled to be issued with (if any) shall be adjusted, calculated or determined in the following manner shall be revised to number of Warrants B to be adjusted shall be calculated or determined in the following manner. 4

9 2.2 Information on the Adjustment to the Exercise Price and Number of Warrants Based on the issued and paid-up share capital of the Company as at the LPD, the Proposed Capital Restructuring will result in the number of shares in Hubline to be reduced to 632,700,978 New Hubline Shares. Pursuant thereto and subject to the Proposed Warrants B Deed Poll Amendments, the exercise price and number of Warrants B by the Warrants B Holders will be adjusted as below: Warrants B Before adjustment After adjustment Refer to Number of warrants 3,079,077, ,953, Exercise price (RM) Value of warrants (RM) (1) 29,005,670 29,005,670 Percentage shareholdings upon full (2) 17.5% (3) 17.5% exercise of warrants Notes: (1) The value of warrants was derived at based on the number of outstanding warrants multiplied by the exercise price of the warrants. (2) Based on the number of ordinary shares in Hubline of 17,607,577,233 of RM0.01 each comprising existing Hubline Shares of 12,654,019,566 of RM0.01 each as at the LPD and the new Hubline Shares to be issued upon the full exercise of Warrants A and Warrants B of 1,874,480,280 of RM0.01 each and 3,079,077,387 of RM0.01 each respectively. (3) Based on the number of New Hubline Shares of 880,378,861 of RM0.10 each comprising 632,700,978 New Hubline Shares upon the completion of the Proposed Capital Restructuring and the additional New Hubline Shares to be issued upon the full exercise of the adjusted Warrants A and Warrants B of 93,724,014 and 153,953,869 respectively. As set out in the table above, the value of the warrants and the percentage shareholdings of the Warrants B Holders, upon exercise, will remain unchanged after the adjustments to the exercise price and number of Warrants B. Please refer to Section 2.3 and Section 2.4 below for further details on the computation of the adjustments to the number of warrants and exercise price of Warrants B. The adjustment to the number and exercise price of Warrants B, as set out in Section 2.3 and Section 2.4 respectively, will only be implemented upon completion of the Proposed Warrants B Deed Poll Amendment, which is subject to the approval of the Warrants B Holders. A notice will be sent out to the Warrants B Holders at a later date, subsequent to the completion of the Proposed Warrants B Deed Poll Amendment, to notify the Warrants B Holders the relevant information pertaining to the adjustments to be made by the Company. 2.3 Adjustment to the number of Warrants B The number of Warrants B will be adjusted as below, in accordance to the Fourth Schedule of the Warrants B Deed Poll: Additional Warrants B to be issued * = T x Original par value for each ordinary share immediately prior to consolidation - T Revised par value for each ordinary share * Proposed to be replaced by number of warrants to be adjusted as set out in Section 2.1 above where, T : 3,079,077,387, being the existing outstanding Warrants B as at the LPD 5

10 By adopting the above adjustment formula, the number of Warrants B shall be reduced from 2,900,567,045 Warrants B to 145,028,352 Warrants B as set out below: Additional Warrants B to be issued = 3,079,077,387 x RM0.005 RM ,079,077,387 = (2,925,123,518) therefore, Adjusted number of Warrants B = 3,079,077,387-2,925,123,518 = 153,953,869 Upon the implementation of the Proposed Capital Restructuring, the par value of Hubline Shares shall be amended to RM0.10 for each Hubline Share, as explained in Appendix I of this Circular. The adjustment to the number of Warrants B will only be implemented upon completion of the Proposed Warrants B Deed Poll Amendment, which is subject to the approvals of the Warrants B Holders. 2.4 Adjustment to the exercise price of Warrants B The exercise price of Warrants B will be adjusted as below, in accordance to the Fourth Schedule of the Warrants B Deed Poll: New exercise price of Warrants B where, = S 1 x Revised par value for each Hubline Share Original nominal value for each Hubline Share S 1 : RM0.01, being the existing exercise price of Warrants B By adopting the above adjustment formula, the exercise price of Warrants B shall be adjusted from RM0.01 per Warrants B to RM0.20 per Warrants B as set out below: New exercise price of Warrants B = RM0.010 x = RM0.200 RM0.100 RM

11 3. RATIONALE FOR THE PROPOSED WARRANTS B DEED POLL AMENDMENT The Company is undertaking the Proposed Capital Restructuring as set out under Appendix I of this Circular to provide the Company with greater flexibility to raise funds and implement any future corporate proposals that entails issuance of its shares, particularly the Proposed Notes Issue. The Proposed Notes Issue will enable the Company to raise up to RM80 million to pare down its borrowings from its container shipping business and assist the Group s drybulk business expansion via the acquisition of two new barges. As at the LPD, the Company has outstanding 1,874 million Warrants A and 3,079 million Warrants B yet to be exercised. Upon completion of the Proposed Capital Restructuring, the issued and paid-up share capital of Hubline will be reduced to RM63.27 million comprising 632,700,978 New Hubline Shares, including the treasury shares. In the event all the existing outstanding Warrants A and Warrants B are exercised, the New Hubline Shares arising from the exercise of the outstanding warrants will be approximately 783% of the issued and paidup capital of Hubline after the Proposed Capital Restructuring, which is shown as below: As at the LPD Without adjustment With adjustment ( 000) (RM 000) ( 000) (RM 000) ( 000) (RM 000) Existing outstanding number of Warrants: Warrants A 1,874, ,448 1,874, ,448 93,724 9,372 Warrants B 3,079, ,908 3,079, , ,954 15,395 Percentage of warrants to the issued and paidup share capital Note: 4,953, ,356 4,953, , ,678 24,768 (1) 39% (2) 783% (2) 39% (1) (2) Based on issued and paid-up share capital of the Company as at the LPD of RM126,540,196 comprising 12,654,019,566 Hubline Shares. Based on the issued and paid-up share capital of the Company upon completion of the Proposed Capital Restructuring of RM63,270,098 comprising 632,700,978 New Hubline Shares. Pursuant to Paragraph 6.50 of the Listing Requirements, a listed issuer must ensure that the number of new shares which will arise from all outstanding warrants, when exercised, does not exceed fifty-percent (50%) of the issued and paid-up capital of the listed issuer. However, Condition 3(E) of the Third Schedule of the Warrants B Deed Poll does not allow any adjustment to reduce the number of warrants that a warrant holder already holds. Hence, the Company is required to undertake the Proposed Warrants B Deed Poll Amendment to adjust the number of warrants held by each Warrants B Holders in compliance with the Listing Requirements of Bursa Securities as well as to facilitate the implementation of the Proposed Capital Restructuring and Proposed Notes Issue. The Proposed Capital Restructuring, the Proposed Warrants A Deed Poll Amendment and the Proposed Warrants B Deed Poll Amendment are inter-conditional upon each other. Further information on the Proposed Capital Restructuring and the Proposed Warrants A Deed Poll Amendment is set out in Appendix I of this Circular. The Company also intends to undertake the Proposed Warrants A Deed Poll Amendment to amend the aforesaid terms in the Warrants A Deed Poll. 7

12 Upon completion of the Proposed Warrants A Deed Poll Amendment and the Proposed Warrants B Deed Poll Amendment, the number of Warrants A and Warrants B will be adjusted pursuant to the Proposed Share Consolidation. Accordingly, in the event all the adjusted outstanding Warrants A and Warrants B are exercised, the new Hubline Shares arising from the exercise of the outstanding warrants will be approximately 40% of the issued and paid-up capital of Hubline after the Proposed Capital Restructuring as set out in the table above. 4. PROSPECTS OF THE GROUP The Group has been in the dry bulk business since year 2007 and is one of the major players within the niche segment for provision of barge logistics services of between 8,000 metric tonnes to 10,000 metric tonnes of bulk cargoes per shipment in the Southeast Asian Region. Currently, the Group operates a fleet of 23 sets of tugs and barges within the Southeast Asian region, including amongst others, Indonesia, Philippines, Vietnam, Cambodia and Thailand. The next largest East-Malaysian player currently operating within the same region and the niche segment operates at about less than 50% in fleet size as compared to the Group. Region-wide, the next largest barge operator operating within the same tonnage, market and region operates at about 70% in fleet size as compared to the Group. Cargo for each voyage mainly comprises bulk based commodities such as coal, gypsum, palm kernel shells, scrap metal and sand. The routes plied by the dry bulk shipping tugs and barges are flexible and can be varied in accordance with market demand as each voyage caters to a single customer per shipment. The ability of its operations to streamline costs and maximise profitability by optimizing it s routing and scheduling of cargo has allowed the division to achieve a high level of vessel utilisation whilst still successfully gaining and maintaining market share. The dry-bulk business has been profitable in recent years. For the past two (2) audited FYE 30 September 2014 and FYE 30 September 2015 as well as unaudited nine (9) months FPE 30 June 2016, the dry-bulk business has recorded revenue of approximately RM90.3 million, RM103.1 million and RM74.9 million respectively. Meanwhile, the segmental profit after tax from the dry-bulk business for the past two (2) audited FYE 30 September 2014 and FYE 30 September 2015 as well as unaudited nine (9) months FPE 30 June 2016 were approximately RM9.6 million, RM13.6 million and RM10.0 million respectively. The Company has successfully established various new routing opportunities and in the process, cemented long standing relationships with various pre-existing clients as well as fresh affiliations with new clients. This has allowed the dry bulk business to shift from only performing North-South routes from Indonesia to Thailand, Cambodia, Vietnam, Philippines and return, to also performing East-West routes from Thailand to Vietnam and Philippines return. The latest routes introduced into the Group s operations include the transportation of woodchip from Singapore to Thailand and Philippines. The recent drop in oil prices has seen a decrease in the Group s freight prices for its dry bulk business. In addition, US dollars have performed relatively strongly against the Ringgit Malaysia. Therefore, the dry-bulk business revenue has remained relatively weathered from the drop in freight prices in view that most of the Group s freight prices are denominated in US Dollars. Furthermore, tugs and barges, by their very nature are only able to operate within areas where large vessels are unable to enter, hence further protecting the Group s dry-bulk business niche market. As such, the Group expects all its operating tugs and barges to remain highly utilized. The Proposed Notes Issue is expected to allow the Company to focus its resources on its drybulk business by enabling the Group to rationalize its financial position by reducing the Group s borrowings for the container shipping division, and thereby reduce the Group s finance cost. It will also enable the Group to expand on its dry bulk business via acquisition of additional tugs and barges, which is expected to contribute positively to the Group s earnings growth. 8

13 5. EFFECTS OF THE PROPOSED WARRANTS B DEED POLL AMENDMENT The Proposed Warrants B Deed Poll Amendment will not have any immediate effect on the following: i. Warrants B Holders warrant holdings in Hubline; and ii. Exercise price of the Warrants B of RM0.01 as well as the number of outstanding Warrants B as at the LPD. Notwithstanding the above, upon the completion of the Proposed Warrants B Deed Poll Amendment, the Company intends to implement the adjustments to the exercise price and number of Warrants B as set out in Section 2.3 and Section 2.4 of this Circular. For the avoidance of doubt, the adjustment will not have any effect to the Warrants B Holders warrant holdings in Hubline. A notice will be sent out to the Warrants B Holders at a later date, subsequent to the completion of the Proposed Warrants B Deed Poll Amendment, to notify the relevant information pertaining to the adjustments to be made by the Company. 6. HISTORICAL WARRANTS B AND HUBLINE SHARE PRICES 6.1 Warrants B The monthly highest and lowest transacted market prices of Warrants B as traded on Bursa Securities since listing on Bursa Securities on December 2015 to November 2016 are as follows: High RM 2015 December January February March April May June July August September October November Low RM Last transacted price of Hubline Shares on 18 July 2016 (being the last Market Day immediately prior to the date of announcement of the Proposed Warrants B Deed Poll Amendment) Last transacted price of Warrants B as at the LPD RM0.010 RM0.005 (Source: Bloomberg) 9

14 6.2 Hubline Shares The monthly highest and lowest transacted market prices of Hubline Shares as traded on Bursa Securities for the past twelve (12) months from December 2015 to November 2016 are as follows: 2015 High RM December January February March April May June July August September October November Low RM Last transacted price of Hubline Shares on 1 June 2016 (being the last Market Day immediately prior to the date of announcement of the Proposals and the Proposed Deed Poll Amendment) Last transacted price of Hubline Shares as at the LPD (Source: Bloomberg) RM0.010 RM APPROVALS REQUIRED The Proposed Warrants B Deed Poll Amendment is subject to the approval of the following parties: (i) Warrants B Holders at the forthcoming Warrants B Holders EGM for the Proposed Warrants B Deed Poll Amendment. The Proposed Warrant B Deed Poll Amendment is required to be approved by the Warrants B Holders via a Special Resolution. According to the Warrants B Deed Poll, the quorum and votes required for passing a Special Resolution is as follows: Quorum Required At least two (2) or more Warrants B Holders present in person or by proxy; and Votes required to pass a Special Resolution Not less than three-fourths (3/4) of the Warrants B Holders voting (in person or by proxy) upon a show of hand or poll Such Warrants B Holders hold in aggregate not less than fifty-percent (50%) of Warrants B for the time being remaining unexercised 10

15 In the event of an adjourned meeting, at least two (2) persons being Warrants B Holders is required to present in person or by proxy at the adjourned meeting, whatever the number of Warrants B held by them will form a quorum to pass the Special Resolution. (ii) (iii) (iv) (v) The shareholders of the Company at the forthcoming shareholders EGM for the approval of the Proposed Capital Restructuring and Proposed Notes Issue; The Warrant A Holders at the forthcoming Warrant A Holders EGM for the approval of the Proposed Warrant A Deed Poll Amendment; Order from Malaysia High Court sanctioning the Proposed Par Value Reduction; and Any other relevant authorities, if required. The Proposed Warrants A Deed Poll Amendment, Proposed Warrants B Deed Poll Amendment and Proposed Capital Restructuring are inter-conditional upon each other. The Proposed Notes Issue is conditional upon the Proposed Capital Restructuring and Proposed Deed Poll Amendment but not vice versa. Save for the above, the Proposed Warrants B Deed Poll Amendment is not conditional upon any other corporate exercises undertaken or to be undertaken by the Company. 8. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors, major shareholders of the Company and/or persons connected to them has any interest, direct or indirect, in the Proposed Warrants B Deed Poll Amendment. 9. DIRECTORS RECOMMENDATION The Board, having considered all aspects of the Proposed Warrants B Deed Poll Amendment including, but not limited to the rationale and effects of the Proposed Warrants B Deed Poll Amendment, is of the opinion that the Proposed Warrants B Deed Poll Amendment is in the best interest of the Group. As such, the Board recommends that you vote in favour of the resolution pertaining to the Proposed Warrants B Deed Poll Amendment to be tabled at the forthcoming Warrants B Holders EGM of the Company. 10. CORPORATE EXERCISES ANNOUNCED BUT PENDING COMPLETION In addition to the Proposed Warrants B Deed Poll Amendment, as at the LPD, the Company had the following proposals that have been announced but yet to be completed: (i) Proposed Capital Restructuring and Proposed Notes Issue as set out in Appendix I of this Circular; and (ii) Proposed Warrants A Deed Poll Amendment as set out in Appendix I of this Circular Save for the abovementioned proposals, there are no other corporate exercises which have been announced by the Company but has yet to be completed as at the LPD. 11

16 11. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances and subject to all requisite approvals being obtained, the Proposed Warrants B Deed Poll Amendment is expected to be completed in the 1 st quarter of EGM The forthcoming EGM, the notice of which is enclosed with this Circular, will be held at Dewan Perpaduan II, 1st Floor, Merdeka Palace Hotel & Suites, Jalan Tun Abang Haji Openg, Kuching, Sarawak, on Tuesday, 10 January 2017 at a.m. or immediately after the conclusion of the Extraordinary General Meeting of Warrants A holders which will be held at a.m. on the same day and at the same venue, whichever is later or at any adjournment thereof for the purpose of considering and if thought fit, passing the resolution to give effect to the Proposed Warrants B Deed Poll Amendment. In the event that the EGM is adjourned, the adjourned EGM will be held Dewan Perpaduan II, 1st Floor, Merdeka Palace Hotel & Suites, Jalan Tun Abang Haji Openg, Kuching, Sarawak, on Tuesday, 17 January 2017 at a.m. or immediately after the conclusion of the adjourned Extraordinary General Meeting of Warrants A holders which will be held at a.m. on the same day and at the same venue, whichever is later. If you are unable to attend and vote in person at the forthcoming EGM or at any adjournment thereof, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions contained therein as soon as possible and in any event, so as to arrive at the registered office of the Company at Wisma Hubline, Lease 3815 (Lot 10914) Section 64 KTLD, Jalan Datuk Abang Abdul Rahim, Kuching, Sarawak not less than forty-eight (48) hours before the time set for the EGM or at any adjournment thereof. The lodging of the Form of Proxy does not preclude you from attending and voting in person at the forthcoming EGM should you subsequently wish to do so. 13. FURTHER INFORMATION You are advised to refer to Appendix I of this Circular for further information. Yours faithfully for and on behalf of the Board HUBLINE BERHAD DENNIS LING LI KUANG Chief Executive Officer / Managing Director 12

17 APPENDIX I INFORMATION ON THE PROPOSALS On 18 July 2016, Kenanga IB had, on behalf of the Board, announced that the Company proposes to undertake the following: i. Proposed Capital Restructuring; ii. iii. iv. Proposed Notes Issue Proposed Warrants A Deed Poll Amendment; and Proposed Warrants B Deed Poll Amendment. Details of the abovementioned proposals, save for Proposed Warrants A Deed Poll Amendment, are set out below. 1. PROPOSED CAPITAL RESTRUCTURING The Proposed Capital Restructuring to be undertaken by the Company comprises the following: 1.1 Proposed Par Value Reduction The Proposed Par Value Reduction involves the cancellation of RM0.005 of the par value of each of the existing ordinary share of RM0.01 each in Hubline to RM0.005 each in Hubline pursuant to Section 64 of the Act. As at the LPD, the issued and paid-up share capital of Hubline is RM126,540,196 comprising of 12,654,019,566 Hubline Shares, including 857,020,684 Hubline Shares issued pursuant to the 6 th and final tranche of private placement as announced on 27 July 2016 and 23 August 2016 respectively and 13,596,600 treasury shares of RM0.01 each ( Treasury Share(s) ). In addition, as at the LPD, the Company has outstanding 1,874,480,280 Warrants A and 3,079,077,387 Warrants B yet to be exercised. In the event any of the outstanding Warrants A and/or Warrants B are exercised and converted into Hubline Share(s) on or prior to the effective date of the Proposed Par Value Reduction, such new Hubline Share(s) arising therefrom shall also be subject to the Proposed Par Value Reduction. For avoidance of doubt, pursuant to the Proposed Par Value Reduction, the par value of all the then existing Hubline Shares will be reduced from RM0.01 each to RM0.005 each. Based on the issued and paid-up ordinary share capital of Hubline as at the LPD, the Proposed Par Value Reduction will result in the reduction of Hubline s issued and paid-up share capital to RM63,270,098 comprising 12,654,019,566 Hubline shares of RM0.005 each and give rise to a credit of RM63,270,098. The credit will be credited to a non-distributable capital reserve account of the Company or used to set-off accumulated losses (if any). The credit in the capital reserve account may be utilised in such manner as the Board deems fit and in the best interest of the Company as permitted by the relevant and applicable laws and the Listing Requirements and will be determined at a later date. The Company has recorded accumulated losses of RM million as at 30 September 2015, which has been reduced to RM19.98 million as at 30 June 2016 pursuant to the par value reduction undertaken by the Company in The actual credit arising from the Proposed Par Value Reduction would depend on the issued and paid-up share capital of the Company on the effective date of the Proposed Par Value Reduction. The effective date of the Proposed Par Value Reduction will be the date of lodgement of the sealed court order of the Malaysia High Court for the Proposed Par Value Reduction with the Companies Commission of Malaysia. 13

18 APPENDIX I INFORMATION ON THE PROPOSALS (cont d) For avoidance of doubt, the Proposed Par Value Reduction will not result in any adjustment to the share price of Hubline and the existing number of ordinary shares of Hubline in issue. The Proposed Par Value Reduction will not result in any adjustment to the warrants price, the exercise price and the outstanding number of Warrants A and Warrants B. 1.2 Proposed Share Consolidation Subsequent to the Proposed Par Value Reduction, the Company intends to undertake the Proposed Share Consolidation, which entails the consolidation of twenty (20) ordinary shares of RM0.005 each in Hubline into one (1) ordinary share of RM0.10 each in Hubline after the Proposed Par Value Reduction. The actual number of New Hubline Shares to be issued pursuant to the Proposed Share Consolidation will be determined based on the issued and paid-up share capital of the Company at the book closure date to be determined after taking into consideration any new Hubline Shares that may be issued pursuant to the exercise of any outstanding Warrants A and Warrants B. For illustration purpose, based on the issued and paid-up share capital of RM million as at the LPD, the impact to the total number of shares in Hubline and the theoretical adjusted reference share price of New Hubline Share(s) upon the completion of the Proposed Share Consolidation and Proposed Par Value Reduction will be as follows: As at the LPD After the Par Value Reduction After the Proposed Share Consolidation Notes: (1) (2) (3) No. of Issued Hubline and paidup (4) Total Shares Par Value capital Share Price Value (4) 000 RM RM 000 RM RM 000 (1) 12,654, ,540 (2) ,270 12,654, , , , ,270 (3) ,270 Including 13,596,600 Treasury Shares as at the LPD. Being the closing market price of Hubline Shares as at the LPD. The theoretical adjusted reference share price of Hubline Shares of RM0.20 is computed as follows: Theoretical adjusted reference share price = Original share price x = RM0.005 x = RM0.100 Number of shares to be consolidated (4) The total value is derived at by multiplying the number of Hubline Shares with the market price of Hubline Share as at the LPD of RM0.005 or the theoretical adjusted reference share price of RM0.10, as the case may be. In addition the reference share price, exercise price and number of Warrants A and Warrants B held by the warrant holders will also be adjusted pursuant to the Proposed Share Consolidation. However, the adjustments to Warrants A and Warrants B are subject to the completion of the Proposed Deed Poll Amendments. 14

19 APPENDIX I INFORMATION ON THE PROPOSALS (cont d) Pursuant to the above, an illustration based on the shareholdings of 1,000 Hubline Shares is set out below: Assumed no. of Hubline Shares Par Value Share Price (3) Total Value RM RM RM As at the LPD 1, After the Par Value Reduction After the Proposed Share Consolidation (1) , (2) Notes: (1) (2) Based on share price of Hubline as at the LPD. The theoretical adjusted reference share price of Hubline Shares of RM0.10 is computed as follows: Theoretical adjusted reference share price = Original share price x = RM0.005 x = RM0.100 Number of shares to be consolidated (3) The total value is derived at by multiplying the number of Hubline Shares with the market price of Hubline Share as at the LPD of RM0.005 or the theoretical adjusted reference share price of RM0.10, as the case may be. Based on the illustration above, the reference share price per Hubline Share will increase pursuant to the Proposed Share Consolidation, but there is no impact to the total value of Hubline Shares held by the Shareholders. In addition, the reference price, exercise price and number of Warrants A and Warrants B held by the warrant holders will also be adjusted as below, pursuant to the Proposed Share Consolidation: Warrants Before adjustment Warrants A After adjustment Before adjustment Warrants B After adjustment Number of warrants 1,874,480,280 93,724,014 3,079,077, ,953,869 Exercise price (RM) However, the adjustments to the number and exercise price of Warrants A and Warrants B set out above are subject to the completion of the Proposed Deed Poll Amendment. Fractional entitlements arising from the Proposed Share Consolidation shall be disregarded and dealt with by the Board in such manner at its absolute discretion as it may deem fit or expedient and in the best interest of the Company Ranking of the New Hubline Shares Upon allotment and issuance, the New Hubline Share(s) shall rank pari passu in all respect with one another Listing and quotation An application will be made to Bursa Securities for the listing and quotation for the New Hubline Shares on the Main Market of Bursa Securities. 15

20 APPENDIX I INFORMATION ON THE PROPOSALS (cont d) Procedures for the implementation of the Proposed Share Consolidation As Hubline Shares are prescribed securities, the New Hubline Shares will be credited directly into the respective central depository system accounts of the entitled shareholders whose name appeared in the record of depositors of the Company on the entitlement date to be determined later and no physical share certificate will be issued. In addition, the trading of Hubline Shares will not be suspended for the purpose of implementing the Proposed Share Consolidation. The New Hubline Shares will be listed and quoted on the Main Market of Bursa Securities on the next market day after the entitlement date. The notices of allotment will be issued and despatched to the entitled shareholders within four (4) Market Days after the date of listing and quotation for the New Hubline Shares. 1.3 Proposed MA Amendment In order to facilitate and accommodate the Proposed Par Value Reduction and the Proposed Share Consolidation, the Company proposes to amend the MA of Hubline as follows: Existing clause in the MA Clause 5 in the MA The share capital of the Company is RM1,000,000,000 divided into 100,000,000,000 shares of RM0.01 each. The shares in the original or any increased capital may be divided into several classes, and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise. Proposed amendments to the existing clause in the MA New Clause 5 in the MA The share capital of the Company is RM1,000,000,000 divided into 10,000,000,000 shares of RM0.10 each. The shares in the original or any increased capital may be divided into several classes, and there may be attached thereto respectively any preferential, deferred or other special rights, privileges, conditions or restrictions as to dividends, capital, voting or otherwise. 2. PROPOSED NOTES ISSUE Hubline had, on 18 July 2016, entered into the Subscription Agreement and subsequently entered into the Supplementary Agreement on 18 November 2016 with the Subscriber and ACPAM for the Proposed Notes Issue, to be issued in four (4) tranches, subject to the terms and conditions as set out in the Subscription Agreement. The Notes are transferable and/or tradable in accordance with the terms and conditions of the Subscription Agreement. The Notes are convertible at the option of the Noteholders into New Hubline Shares at the conversion terms prior to the Maturity Date and are redeemable at the election of Hubline or on the Maturity Date in cash, subject to the terms and conditions as set out in the Subscription Agreement. The Proposed Notes Issue is expected to raise up to RM20.0 million through the issuance of Tranche 1 Notes. Further amounts of up to RM60.0 million may be raised through the issuance of the remaining three (3) tranches, at the discretion of the Company, subject to the terms and conditions as set out in the Subscription Agreement. For the avoidance of doubt, no funds will be raised upon conversion of the Notes into New Hubline Shares. The Notes will be constituted by a trust deed to be executed by the Company but the Notes are neither guaranteed nor secured. 16

21 APPENDIX I INFORMATION ON THE PROPOSALS (cont d) 2.1 Basis of determining the Conversion Price of the Notes The basis of setting the Conversion Price for the Notes is a commercial decision agreed upon between the Company and the Subscriber. In addition, the discount rate in relation to the Conversion Price are negotiated and accepted by the Company and the Subscriber from a commercial perspective after the parties taking into consideration their respective cost of funding. For illustrative purposes, based on the share price of Hubline as at the LPD of RM0.005, the theoretical adjusted reference share price for the New Hubline Shares upon the completion of the Proposed Share Consolidation shall be RM0.10. Accordingly, based on 80% of the theoretical adjusted reference share price of RM0.10 per New Hubline Share, the theoretical Conversion Price for the Tranche 1 Notes shall be RM0.08. However, as set out in the Subscription Agreement, the Conversion Price cannot be less than the par value of the New Hubline Shares and thus the theoretical Conversion Price for the Tranche 1 Notes shall be RM0.10. Based on the Conversion Price of RM0.10, the number of Conversion Shares to be issued, assuming the entire Tranche 1 Notes with a principal amount of RM20.0 million are issued and subscribed pursuant to the Proposed Notes Issue, would be 200,000,000 Conversion Shares. For avoidance of doubt, the Conversion Price for the Notes is yet to be determined. Based on the Subscription Agreement, the lowest Conversion Price is RM0.10, being the new par value of the New Hubline Shares upon the completion of the Proposed Capital Restructuring, the maximum number of Conversion Shares to be issued pursuant to the Proposed Notes Issue would be 800,000,000 Conversion Shares. The Proposed Notes Issue will result in the shareholders shareholdings in Hubline to be proportionately diluted as a result of the increase in the number of New Hubline Shares arising from the conversion of the Notes. For illustration purposes, the 800,000,000 Conversion Shares to be issued pursuant to the Proposed Notes Issue will represent approximately 126% of 632,700,978 Hubline Shares upon the completion of the Proposed Capital Restructuring and approximately 56% of 1,432,700,978 Hubline Shares upon the full conversion of Notes. In addition to the above, assuming full exercise of the outstanding 93,724,014 Warrants A and 153,953,869 Warrants B upon the Proposed Share Consolidation and subject to the Proposed Deed Poll Amendment, the Conversion Shares to be issued pursuant to the Proposed Notes Issue of 800,000,000 will represent approximately 91% of 880,378,862 Hubline Shares upon the completion of the Proposed Capital Restructuring and approximately 48% of 1,680,378,862 Hubline Shares upon the full conversion of Notes. However, as set out in the Subscription Agreement, there will be no conversion of the Notes by the Subscriber to transfer a controlling interest in the Company such that the Subscriber becomes a controlling shareholder of the Company without the prior approval of the Company s shareholders, nor to hold more than 10% interest in the issued and paid-up share capital of the Company, at any time and from time to time, without the Company s prior approval. Notwithstanding the above, should the Companies Act 2016 come into effect and the Hubline Shares are issued with no par value, the Company has set RM0.05 as the minimum conversion price after taking into consideration the followings: (i) (ii) the theoretical reference share price of Hubline of RM0.10 upon completion of the Proposed Share Consolidation; the declining trend of the share price of Hubline for the past one (1) year from RM0.15 as at 23 November 2015 to RM0.005 as at the LPD; and 17