CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED (Incorporated in Singapore on 7 March 1994) (Registration Number D)

Transcription

1 CIRCULAR DATED 24 JANUARY 2011 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, TAX ADVISER OR OTHER PROFESSIONAL ADVISER IMMEDIATELY. Unless otherwise stated, capitalised terms on this cover are defined in this Circular under the Section entitled Definitions. If you have sold or transferred all your Shares, you should immediately forward this Circular, the Notice of Extraordinary General Meeting and the Proxy Form to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED (Incorporated in Singapore on 7 March 1994) (Registration Number D) CIRCULAR TO SHAREHOLDERS in relation to (1) THE PROPOSED REMOVAL OF CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED FROM THE NORWEGIAN OVER-THE-COUNTER SYSTEM. (2) THE PROPOSED AMENDMENTS TO THE RULES OF THE CIMC RAFFLES EXECUTIVE SHARE OPTION SCHEME. IMPORTANT DATES AND TIMES: Last date and time for lodgment of voting instructions by VPS Shareholders with the VPS Registrar (each term as defined in this Circular) Last date and time for lodgment of Proxy Form by Registered Shareholders with the Share Registrar (each term as defined in this Circular) : 10 February 2011 at 9.30 a.m. (Norwegian time) : 14 February 2011 at 9.30 a.m. (Singapore time) Date and time of Extraordinary General Meeting : 16 February 2011 at 9.30 a.m. (Singapore time) Place of Extraordinary General Meeting : No. 1 Claymore Drive, #08-04 Orchard Towers, Singapore

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3 CONTENTS Page DEFINITIONS TENTATIVE TIMETABLE LETTER TO SHAREHOLDERS INTRODUCTION REMOVAL RESOLUTION BACKGROUND TO THE REMOVAL RATIONALE FOR THE REMOVAL IMPLICATIONS OF THE REMOVAL TRANSACTIONS IN THE SHARES AFTER THE REMOVAL PROPOSED AMENDMENTS TO THE RULES INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INDEPENDENT DIRECTORS RECOMMENDATION EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN BY SHAREHOLDERS APPENDIX NOTICE OF EXTRAORDINARY GENERAL MEETING PROXY FORM 1

4 DEFINITIONS In this Circular, the following definitions shall apply throughout unless the context otherwise requires or unless otherwise stated: Announcement Date : 21 January 2011, being the date on which CIMC Raffles announced the proposed Removal Board : The board of Directors as at the date of this Circular CIMC : China International Marine Containers (Group) Co., Ltd. CIMC Group : CIMC and its subsidiaries CIMC HK : China International Marine Containers (Hong Kong) Limited CIMC Offshore Holdings : CIMC Offshore Holdings Limited (formerly known as Bright Day Limited) CIMC Raffles : CIMC Raffles Offshore (Singapore) Limited (formerly known as Yantai Raffles Shipyard Limited) CIMC Raffles Group : CIMC Raffles and its subsidiaries Circular : This circular to Shareholders issued by CIMC Raffles in relation to the proposed Removal and proposed amendments to the Rules Code : The Singapore Code on Take-overs and Mergers, as amended or modified from time to time Committee : A committee comprising Directors duly authorised, appointed and nominated by the Board pursuant to the Rules to administer the Scheme Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Directors : The directors of CIMC Raffles as at the date of this Circular Distribution Agreement : Agreement between CIMC Raffles and Fondsmeglernes Informasjonstjeneste AS (or Norwegian Stockbrokers Information Services) relating to the distribution of price relevant information on the trading support system for unlisted shares of Fondsmeglernes Informasjonstjeneste AS (or Norwegian Stockbrokers Information Services) EGM : Extraordinary general meeting of CIMC Raffles to be held on 16 February 2011, notice of which is set out on page 22 of this Circular, or any adjournment thereof Independent Directors : The independent Directors of CIMC Raffles, being Mr Liu Chee Ming, Mr Yu Ning and Mr Zhang Li Min Latest Practicable Date : 18 January 2011, being the latest practicable date prior to the printing of this Circular 2

5 DEFINITIONS NOTC : The Norwegian Over-The-Counter system administered and operated by the NSDA Notice of EGM : The notice of EGM as set out on page 22 of this Circular NSDA : Norwegian Securities Dealers Association Offer : The voluntary unconditional cash offer by CIMC Offshore Holdings (then known as Bright Day Limited) to acquire all the issued Shares other than those held, directly or indirectly, by CIMC Offshore Holdings, certain entities controlled by CIMC and certain entities controlled by Mr Brian Chang, announced by CIMC Offshore Holdings on 16 November 2009 Offer Document : Offer Document dated 30 November 2009 issued by CIMC Offshore Holdings in connection with the Offer Options : Options to subscribe for new Shares granted pursuant to the Scheme Registered Shareholders : Registered holders of Shares named in the Register of Members of CIMC Raffles (including the VPS Registrar) Removal : The removal of CIMC Raffles from the NOTC Removal Resolution : The resolution to be proposed at the EGM to approve the Removal, being Ordinary Resolution 1 as set out in the Notice of EGM Rights Issue : The rights issue undertaken by CIMC Raffles in July 2010 to raise gross proceeds of approximately US$100.5 million Rules : The rules of the Scheme, as may be amended or modified from time to time Scheme : The CIMC Raffles Executive Share Option Scheme (formerly known as the Yantai Raffles Executive Share Option Scheme) Share Registrar : Kinetica Pte. Ltd. Shareholders : The Registered Shareholders (other than the VPS Registrar) and the VPS Shareholders collectively Shares : Ordinary shares in the capital of CIMC Raffles Substantial Shareholder : A person who has an interest or interests in voting shares in CIMC Raffles representing not less than 5% of all the voting shares in CIMC Raffles VPS : Verdipapirsentralen, or Norwegian Central Securities Depository VPS Registrar : DnB NOR Bank ASA, Registrar Department 3

6 DEFINITIONS VPS Shareholders : Persons who are registered in the VPS register of CIMC Raffles as holders of beneficial interests in the VPS Shares VPS Shares : Shares registered in the name of the VPS Registrar and held by the VPS Registrar as nominee for the VPS Shareholders, and which are registered in the VPS and traded on the NOTC S$ and cents : Singapore dollar and cents, respectively US$ and US cents : United States dollar and cents, respectively % or per cent : Percentage or per centum The term subsidiary shall have the meaning ascribed to it in section 5 of the Companies 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 and vice versa. References to persons shall, where applicable, include corporations. Any reference to a time of the day and date in this Circular shall be a reference to Singapore time and date respectively, unless otherwise stated. Any reference in this Circular to any enactment is a reference to that enactment for the time being amended or re-enacted. Any words defined in the Companies Act, or any modification thereof, and used in this Circular shall, where applicable, have the meanings ascribed to them respectively under the Companies Act, or such modification thereof, unless otherwise provided. Any discrepancies in figures included in this Circular between the amounts listed and the totals thereof are due to rounding. Accordingly, figures shown as totals in this Circular may not be an arithmetic aggregation of the figures that precede them. 4

7 TENTATIVE TIMETABLE The important dates and times (Singapore time, unless otherwise stated) are as follows: Last date and time for lodgment of voting instructions by VPS Shareholders with the VPS Registrar Last date and time for lodgment of Proxy Form by Registered Shareholders with the Share Registrar : 10 February 2011 at 9.30 a.m. (Norwegian time) : 14 February 2011 at 9.30 a.m. Date and time of EGM : 16 February 2011 at 9.30 a.m. Expected date of despatch of notice to VPS Shareholders on the cancellation of VPS registration of the Shares Expected date of the last day of trading of VPS Shares on the NOTC Expected date of settlement of last trades on the NOTC prior to cessation of trading Expected date for despatch of share transfer forms to VPS Shareholders for execution as transferee Expected date of the last day for returning executed share transfer forms by VPS Shareholders Expected date for transfer of VPS Shares from the VPS Registrar to VPS Shareholders in their own names : 18 February 2011 (Norwegian time) : 28 February 2011 (Norwegian time) : 3 March 2011 (Norwegian time) : 9 March 2011 (Norwegian time) : 25 March 2011 (Norwegian time) : 4 April 2011 Expected date for completion of Removal : 4 April 2011 Shareholders should note that, save for the last dates and times for lodgment of the voting instructions and the proxy form for the EGM, and the date and time of the EGM, the above timetable is indicative only and may be subject to change. For events listed above which are described as expected, please refer to future announcement(s) by CIMC Raffles released on CIMC Raffles website at and, where permitted, the website of the Norwegian Securities Dealers Association at Note: Proxy forms should be duly completed by Registered Shareholders and deposited at 6 Temasek Boulevard, #29-00 Suntec Tower Four, Singapore marked to the attention of the Company Secretary not less than 48 hours before the time appointed for the EGM. Completion and return of a proxy form will not preclude a Registered Shareholder from attending and voting in person at the EGM in place of his proxy. Voting instructions forms for use by VPS Shareholders will be despatched together with this Circular by the VPS Registrar to VPS Shareholders. Voting instructions forms should be completed by VPS Shareholders in accordance with the instructions printed thereon so as to reach the VPS Registrar at DnB NOR Bank ASA, Registrars Department, Stranden 21, 0021 Oslo, Norway (Fax: ) marked to the attention of K. G. Berg not later than 9.30 a.m. (Norwegian time) on 10 February

8 TENTATIVE TIMETABLE The proxy form attached to this Circular is not for use by VPS Shareholders, and any proxy form completed by VPS Shareholders and submitted to the Share Registrar will be rejected. Persons who hold Shares through a nominee are advised to check with their respective nominees early to ascertain and comply with the procedure (if any) for voting at the EGM through these nominees. The proxy form attached to this Circular is not for use by such persons, and any proxy form completed by them and submitted to the Share Registrar will be rejected. VPS Shareholders should note that after the trading of VPS Shares on the NOTC has ceased and until the completion of the Removal, the VPS Registrar will not register any transfer of VPS Shares on the VPS register. Upon the completion of the Removal, CIMC Raffles will no longer maintain the VPS register. Any transfer of shares should be effected through the Share Registrar. 6

9 LETTER TO SHAREHOLDERS CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED (Incorporated in Singapore on 7 March 1994) (Registration Number D) 24 January 2011 Directors: Mai Bo Liang (Chairman and Executive Director) Brian Chang (Deputy Chairman and Executive Director) Chang Yee Meng Malcolm (Executive Director) Yu Ya (Executive Director) Yu Yu Qun (Executive Director) Wang Yu (Executive Director) Liu Chee Ming (Independent Director) Yu Ning (Independent Director) Zhang Li Min (Independent Director) Registered Office: 1 Claymore Drive #08-04 Orchard Towers Rear Block Apartment Singapore Dear Shareholders, (1) PROPOSED REMOVAL OF CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED FROM THE NORWEGIAN OVER-THE-COUNTER SYSTEM (2) PROPOSED AMENDMENTS TO THE RULES OF THE CIMC RAFFLES EXECUTIVE SHARE OPTION SCHEME 1. INTRODUCTION 1.1 On the Announcement Date, CIMC Raffles announced that, pursuant to a request by its major shareholder, CIMC Offshore Holdings, and after careful consideration, it is proposed that CIMC Raffles be removed from the NOTC and the approval of Registered Shareholders will be sought for the Removal as well as amendments to some of the Rules which would be rendered irrelevant or inapplicable if the Removal is approved and proceeded with. 1.2 The purpose of this Circular is: (a) to provide Shareholders with information relating to the Removal and the amendments that are required to be made to the Rules as a result of the Removal, and (b) to seek Registered Shareholders approval for the Removal Resolution and for the amendments to be made to the Rules at the EGM. 2. REMOVAL RESOLUTION 2.1 Admission to the NOTC CIMC Raffles was admitted to the NOTC in 2006, and the Shares have been traded on the NOTC since then. 2.2 NOTC rules relating to removal Under the NOTC rules, if a company on the NOTC is the subject of an acquisition and the acquiror achieves an ownership of more than 90% of the shares of the company, that company will on request by the acquiror be removed from the NOTC. 7

10 LETTER TO SHAREHOLDERS In addition, a company on the NOTC may also request to be removed from the NOTC if the removal has been approved by shareholders in general meeting by a two-third (2/3) majority. The NOTC rules do not require that an exit offer be made to Shareholders in connection with a removal from the NOTC pursuant to the approval of shareholders. 2.3 Removal Resolution CIMC Raffles is convening the EGM to seek the approval of Registered Shareholders for the Removal Resolution. In view of the NOTC rules as explained in Section 2.2, the Removal Resolution must be approved by a two-third (2/3) majority of the Registered Shareholders present and voting at the EGM. If the Removal Resolution is passed by the requisite majority at the EGM, CIMC Raffles intends to apply to the NSDA for CIMC Raffles to be removed from the NOTC. As at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly an aggregate of 342,860,173 Shares, representing approximately 83.55% of the total number of issued Shares. CIMC Offshore Holdings is entitled to vote on the Removal Resolution, and has informed the Board that it will vote in favour of the Removal Resolution. As such, it is expected that the Removal Resolution will be passed at the EGM. 2.4 No exit offer CIMC Offshore Holdings has conveyed to the Board that it does not intend to make an exit offer for the Shares in connection with the Removal. As such, Shareholders should note that there is no exit offer for the Shares in connection with the Removal. 3. BACKGROUND TO THE REMOVAL 3.1 Request by CIMC Offshore Holdings for the Removal In November 2010, the Board received a request from CIMC Offshore Holdings to consider seeking the approval of Shareholders for the Removal. By way of background, in November 2009, CIMC Offshore Holdings made the Offer and subsequently despatched the Offer Document to Shareholders. Pursuant to the Offer and certain transactions between CIMC Offshore Holdings, certain entities controlled by CIMC and certain entities controlled by Mr Brian Chang (as described in the Offer Document), CIMC Offshore Holdings became the single largest shareholder of CIMC Raffles and held, directly and indirectly an aggregate of approximately 81.96% of the total number of issued Shares as at the relevant time. In the Offer Document, CIMC Offshore Holdings had stated that: (a) if it obtains more than 90% of the total issued Shares as at the close of the Offer, an application will be made for CIMC Raffles to be removed from the NOTC; and (b) if it does not obtain more than 90% of the Shares as at the close of the Offer, it may still consider removing CIMC Offshore Holdings from the NOTC and a shareholders meeting may be held for this purpose. As CIMC Offshore Holdings did not obtain more than 90% of the issued Shares as at the close of the Offer, it has requested the Board to consider seeking the approval of Shareholders for the Removal. 8

11 LETTER TO SHAREHOLDERS 3.2 CIMC Offshore Holdings intention for CIMC Raffles By way of background, the intentions of CIMC Offshore Holdings for CIMC Raffles as disclosed in the Offer Document are summarised below: (a) CIMC Offshore Holdings had stated that through the Offer, it wished to increase its shareholding in CIMC Raffles and become the largest shareholder of the CIMC Group and that, as the largest shareholder of the CIMC Raffles Group, it would like to achieve the objectives of better aligning the strategic objectives of the CIMC Raffles Group with that of the CIMC Group and tapping the skills, experience and expertise of CIMC Raffles current management. CIMC Offshore Holdings had further stated that as the new controlling shareholder of CIMC Raffles, it also intends for CIMC Raffles to become a platform for the implementation of CIMC s long-term strategy to be a leading offshore marine facilities manufacturer and to provide a broader foundation and stable path for development in this respect. (b) CIMC Offshore Holdings had stated that it was the intention of its shareholders to effect a Liquidity Event on terms acceptable to each of them within an initial target period of three (3) years after the successful close of the Offer. A Liquidity Event refers to: (i) (ii) (iii) a single transaction involving the sale, transfer or other disposal of all the shares in CIMC Offshore Holdings by its shareholders; a sale or disposition of CIMC Offshore Holdings shareholdings in CIMC Raffles or all or substantially all its assets; or the initial public offering of the shares of CIMC Offshore Holdings or the Shares on a recognised stock exchange. In a clarification announcement issued on 11 December 2009, CIMC Offshore Holdings clarified that there were no firm plans at that time, and that the definition of Liquidity Event merely reflected the range of options available if and when an agreement can be reached between its shareholders. Further, whether or not the shareholders of CIMC Offshore Holdings can eventually agree on a Liquidity Event and, if so, the terms of such Liquidity Event, will have to depend on a number of factors, including the economic environment at the relevant time and the level of shareholding of CIMC Offshore Holdings in CIMC Raffles following the close of the Offer. The above is only a summary of relevant sections of the Offer Document. Shareholders are advised to refer to the Offer Document, as well as the circular dated 12 December 2009 issued by CIMC Raffles in relation to the Offer (both of which can be found on CIMC Raffles website at CIMC Offshore Holdings has informed the Board that there is no change in its intentions for CIMC Raffles from that disclosed in the Offer Document, and reiterated that there is no firm plan with regard to effecting a Liquidity Event at this time. However, CIMC Offshore Holdings retains the flexibility at any time to consider any options or opportunities (including any Liquidity Event) which may present themselves and which it regards to be in the interests of CIMC Offshore Holdings and/or the CIMC Group. 9

12 LETTER TO SHAREHOLDERS 3.3 Irrevocable Undertaking by CIMC Offshore Holdings To facilitate the consideration by the Board of CIMC Offshore Holdings request for the Removal, CIMC Offshore Holdings has on 18 January 2011 given an irrevocable undertaking to the Board that it will not, directly or indirectly, purchase or otherwise acquire any Shares, whether on the NOTC or otherwise, during the period from the date of the undertaking to the earliest of: (a) the date on which CIMC Raffles is removed from the NOTC; (b) the date falling 6 months from the date of the undertaking if CIMC Raffles has not by then sent out the Notice of EGM; and (c) the date on which the Board notifies CIMC Offshore Holdings that it has decided not to proceed with the Removal. 4. RATIONALE FOR THE REMOVAL 4.1 Small free float and lack of demand for the Shares by investors CIMC Raffles undertook the Rights Issue in July Pursuant to the Rights Issue, CIMC Raffles issued 136,782,500 Shares, out of which CIMC Offshore Holdings subscribed for 118,654,148 Shares, and other Shareholders subscribed for 18,128,352 Shares. Following the completion of the Rights Issue, the total number of issued Shares increased from 273,565,000 to 410,347,500. Prior to the issue of Shares pursuant to the Rights Issue, CIMC Raffles had a total of 273,565,000 Shares, out of which there were only 131,299,700 VPS Shares, representing approximately 48.00% of the then total issued Shares. CIMC Offshore Holdings held an aggregate of 94,047,374 VPS Shares out of these 131,299,700 VPS Shares. This means that there was only an effective free float of 37,252,326 VPS Shares that are tradable on the NOTC, which represented only approximately 13.62% of the then total issued Shares. Prior to the issue of Shares pursuant to the Rights Issue, CIMC Offshore Holdings held directly and indirectly an aggregate of 224,206,025 Shares (comprising 94,047,374 VPS Shares and 130,158,651 Shares registered in its own name), representing approximately 81.96% of the then total issued Shares. As such, even if holders of Shares that were not then registered in the VPS (excluding CIMC Offshore Holdings) were to transfer their 12,106,649 Shares, representing approximately 4.43% of the then total issued Shares, to the VPS Registrar for registration in the VPS, there would only be a potential maximum free float of 49,358,975 VPS Shares, representing approximately 18.04% of the then total issued Shares. As at the Latest Practicable Date, CIMC Raffles has a total of 410,347,500 issued Shares, out of which there are only 193,206,015 VPS Shares, representing approximately 47.08% of the total issued Shares. CIMC Offshore Holdings holds an aggregate of 141,071,061 VPS Shares out of these 193,206,015 VPS Shares. This means that there is only an effective free float of 52,134,954 VPS Shares that are tradable on the NOTC, which represents only approximately 12.71% of the total issued Shares. As at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly an aggregate of 342,860,173 Shares (comprising 141,071,061 VPS Shares and 201,789,112 Shares registered in its own name), representing approximately 83.55% of the total issued Shares. As such, even if holders of Shares that are not currently registered in the VPS (excluding CIMC Offshore Holdings) were to transfer their 15,352,373 Shares, representing approximately 3.74% of the total issued Shares, to the VPS Registrar for registration in the VPS, there would 10

13 LETTER TO SHAREHOLDERS only be a potential maximum free float of 67,487,327 VPS Shares, representing approximately 16.45% of the total issued Shares. The above shows that there is actually only a small percentage of Shares that were and are available for trading on the NOTC. In particular, despite the issue of new Shares pursuant to the Rights Issue and the total issued Shares increasing by 50.00% from 273,565,000 to 410,347,500, the effective free float decreased from approximately 13.62% to approximately 12.71% and the maximum potential free float decreased from approximately 18.04% to approximately 16.45%. The Board believes that the small free float reduces demand for the Shares by investors. 4.2 Low trading liquidity of the Shares During the period from 20 January 2010 to 13 August 2010 (being the market day immediately preceding 16 August 2010, the date on which the new Shares issued pursuant to the Rights Issue were credited to the securities accounts of the relevant VPS Shareholders and became tradable on the NOTC), the daily average volume of the Shares traded on the NOTC was 6,918 Shares. This constitutes approximately 0.003% of the then total number of 273,565,000 issued Shares and 0.02% of the then effective free float of 37,252,326 VPS Shares. During the period from 16 August 2010 to the Latest Practicable Date, the daily average volume of Shares traded on the NOTC was 10,528 Shares. This constitutes approximately 0.003% of the increased total number of 410,347,500 Shares and approximately 0.02% of the effective free float of 52,134,954 VPS Shares. Based on historical trading patterns and taking into account the low free float (as to which please see further Section 4.1 above), it is the Board s view that the low liquidity of the Shares is likely to continue. 4.3 Costs of maintaining the NOTC-registered status CIMC Raffles incurs compliance and other associated costs in maintaining itself on the NOTC. For 2010, the regular compliance and other associated costs (comprising primarily fees payable to the VPS Registrar and the NSDA, and to UBS AG for use of their system for the issue of Shares pursuant to the exercise of Options) are estimated to be around S$70,000. Whilst this is a relatively small amount, CIMC Raffles also has to incur additional legal and other costs when undertaking corporate exercises, such as the Offer and the recent Rights Issue. In addition, the management of CIMC Raffles has to expend time and resources in dealing with issues relating to its NOTC-registered status. Given the small free float, low trading liquidity, the lack of demand for the Shares from investors and the fact that the NOTC is an information system for unlisted shares and is not a stock exchange (as to which please see further Section 5.1), the Board considers that the costs required to be incurred and the management time and resources required to be expended do not justify continuing to maintain CIMC Raffles on the NOTC. The Removal would allow CIMC Raffles to dispense with the compliance and other associated costs required to maintain itself on the NOTC, and allow CIMC Raffles management to focus their time and resources on managing and operating its business. 11

14 LETTER TO SHAREHOLDERS 5. IMPLICATIONS OF THE REMOVAL 5.1 No more information on indicative and transacted prices for the Shares The NOTC system is an information system for unlisted shares and functions by securities dealers entering buy and sell interests with indicative prices in the system if they have customers who want to buy or sell shares in a company on the NOTC list. Other securities dealers can see these interests on their computer monitors and can phone the securities dealer to agree on a possible transaction if they have a customer who has entered a reciprocal order. If the trade comes about, the buying securities dealer must register the transaction in the system. 1 As CIMC Raffles is traded on the NOTC, information on buy and sell interests with indicative prices of the Shares as well as transacted prices of the Shares are available to investors. Upon the Removal, such information will no longer be available. With the lack of information on buy and sell interests and pricing of the Shares, Shareholders would lose a channel that facilitates trading of the Shares and will likely find it difficult to sell their Shares. Shareholders should note that, based on the current timetable, if the Removal Resolution is approved at the EGM, the last day for trading of the VPS Shares on the NOTC will be on or around 28 February 2011 (Norwegian time). Thereafter, the VPS Registrar will not register any transfer of VPS Shares on the VPS register. 5.2 Withdrawal of the VPS Shares from the VPS Upon the Removal, the VPS Shares which are currently registered in the VPS and held by the VPS Registrar as nominee for the VPS Shareholders will be withdrawn from the VPS and can no longer be transferred through the VPS. Please see further Section 6 below. 5.3 Reduction of Number of Information Channels CIMC Raffles has entered into the Distribution Agreement pursuant to which it has agreed to (among other things) transmit, through the NOTC reporting system, information regarding CIMC Raffles or the Shares which are considered of significant importance for a correct evaluation of the prices of the Shares. Currently, CIMC Raffles releases information on the website of the NSDA at pursuant to the Distribution Agreement, as well as on its own corporate website at CIMC Raffles expects that the Distribution Agreement will be terminated following the Removal and will cease to release information on the website of the NSDA. However, CIMC Raffles will continue to release information on its corporate website. 6. TRANSACTIONS IN THE SHARES AFTER THE REMOVAL 6.1 As at the Latest Practicable Date, there are 193,206,015 VPS Shares. Upon the Removal, these VPS Shares will be withdrawn from the VPS and transferred to the VPS Shareholders who will be registered as holders of the VPS Shares in the Register of Members of CIMC Raffles. In this regard, each VPS Shareholder will be required to execute an instrument of transfer ( Share 1 This description is based generally on information in the document titled How does the Norwegian OTC system work? found on the NOTC website at 12

15 LETTER TO SHAREHOLDERS Transfer Form ) as transferee and return the executed Share Transfer Form to the VPS Registrar for its execution as transferor. Further instructions on the execution and return of the Share Transfer Form will be given in the letter accompanying the Share Transfer Form to be despatched after the EGM to the VPS Shareholders at their registered addresses appearing on the VPS register as at the relevant time. Subject to the proper execution and return of the Share Transfer Form in accordance with the specified instructions, each VPS Shareholder will be entitled to receive a physical share certificate in respect of its VPS Shares. The physical share certificates will be despatched to the VPS Shareholders at their registered addresses appearing on the VPS register as at the relevant time. Shareholders should note this process may take some time, and the physical share certificates may be despatched to them up to one month or longer from the date of the Removal. Each VPS Shareholder will bear its own relevant postage/courier charges incurred in connection with the return of the executed Share Transfer Form to the VPS Registrar. CIMC Raffles will bear all stamp duties payable under Singapore law in relation to the transfers of the VPS Shares from the VPS Registrar to the VPS Shareholders. 6.2 Persons who hold VPS Shares through a nominee should note that the VPS Shares will be transferred to the nominee who is registered as the VPS Shareholder immediately prior to the Removal. 6.3 After the withdrawal of the VPS Shares from the VPS, any transfer of these Shares will have to be made by way of delivery of duly executed and witnessed instrument of transfer together with the relevant share certificates in accordance with the Articles of Association of CIMC Raffles. Shareholders may contact the Share Registrar for more information. 6.4 If Shareholders wish to buy or sell the Shares on the NOTC, they must do so prior to the Removal becoming effective. In the event that the Removal Resolution is approved at the EGM, it is anticipated that the last day for trading on the NOTC will be 28 February 2011 (Norwegian time). 7. PROPOSED AMENDMENTS TO THE RULES The Scheme was approved by Shareholders on 21 June 2006 at an extraordinary general meeting of CIMC Raffles. The purpose of the Scheme is to attract, motivate and retain the employees of CIMC Raffles, its subsidiaries and associated companies, and to provide an incentive to, and encourage share ownership in CIMC Raffles by, such employees who meet the eligibility criteria and will contribute to the progressive growth and expansion of CIMC Raffles. The Removal, if approved by Registered Shareholders and proceeded with, will render some of the Rules irrelevant or inapplicable. As such, it is proposed that the Rules be amended in conjunction with the Removal. A summary of the proposed amendments to the Rules is set out below: (a) Rule 2.1 Rule 2.1 sets out the definitions of terms used in the Scheme. It is proposed that the definitions of NOK, Oslo OTC and trading day be deleted as these terms would no longer be applicable upon the Removal. It is also proposed that the reference to provided always that such exercise price shall not be less than US$ per share or its equivalent in the currency in which it is offered be deleted from the definition of Exercise Price as it no longer bears any significance. 13

16 LETTER TO SHAREHOLDERS (b) Rule 7 Rule 7 provides that the exercise price for each Share in respect of which an Option is exercisable shall be equivalent to the arithmetic average of the daily volume weighted average price of the Shares listed on the NOTC during the period of 3 trading days of the NOTC ending on the day before the date on which the Option is granted. Upon the Removal, this manner of determining the exercise price will no longer be applicable. It is proposed that Rule 7 be amended to provide that the exercise price for each Share in respect of which an Option is exercisable shall be determined by the Committee in its discretion. (c) Rule 10.3 Rule 10.3 provides that CIMC Raffles may but is not obliged to apply to the NOTC for permission to deal in and for quotation of the Shares that are issued pursuant to the exercise of Options. It is proposed that Rule 10.3 be deleted as this would no longer be applicable upon the Removal. (d) Rule 12.1 Rule 12.1 provides for adjustments to (among other things) the exercise price of an Option and the number of Shares comprised in an Option under certain circumstances. However, Rule 12.1 provides that the cancellation of Shares that are bought back by CIMC Raffles on the NOTC will not normally be regarded as a circumstance that requires adjustments, unless the Committee otherwise determines. It is proposed that the relevant part of Rule 12.1 which refers to the buy back of Shares on the NOTC be deleted, as this will no longer be relevant upon the Removal. (e) Rule 20 Rule 20 provides that the Committee and CIMC Raffles shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to CIMC Raffles delay in issuing, or procuring the transfer of, the Shares or applying for or procuring the listing of the Shares on the NOTC in accordance with Rule It is proposed that the relevant part of Rule 20 which refers to the listing of the Shares on the NOTC be deleted, as this will no longer be relevant upon the Removal. (f) References to NOK It is proposed that the references to NOK in the schedules to the Scheme be deleted, as they would no longer be applicable upon the Removal. The amended Rules, if approved, will apply to all subsequent grants of Options. Options granted prior to the amendments will be affected to the extent that it will no longer be possible for the Shares that are issued pursuant to the exercise of Options to be registered in the VPS for trading on the NOTC. For the avoidance of doubt, nothing herein precludes CIMC Raffles and a holder of existing Options from mutually agreeing to amend the terms of the existing Options in a manner which is not inconsistent with the amended Rules. 14

17 LETTER TO SHAREHOLDERS The proposed amendments of the relevant Rules (other than the amendments referred to in paragraph (f) above which are editorial in nature) are set out in the Appendix to this Circular and are subject to the approval of Registered Shareholders. 8. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS Based on information available to CIMC Raffles, the interests of the Directors and the Substantial Shareholders in the Shares and the interests of Directors in the Options as at the Latest Practicable Date are as follows: Direct Interest Deemed Interest Name No. of Shares % No. of Shares % (1) Substantial Shareholders CIMC Offshore Holdings 201,789, ,071, CIMC HK (2) 342,860, CIMC (3) 342,860, Brian Chang (4) 342,860, Directors (other than Substantial Shareholders) Mai Bo Liang Chang Yee Meng Malcolm 1,033, Yu Ya Yu Yu Qun Wang Yu Liu Chee Ming 1,561, Yu Ning Zhang Li Min No. of Options Directors Chang Yee Meng Malcolm (5) Liu Chee Ming 25,000 Notes: (1) The computation of the above percentages is made based on a total of 410,347,500 issued Shares as at the Latest Practicable Date. (2) CIMC HK owns approximately 61.76% of the issued shares in CIMC Offshore Holdings and, as such, is deemed to have an interest in the Shares in which CIMC Offshore Holdings has an interest. (3) CIMC owns 100% of the issued shares in CIMC HK and, as such, is deemed to have an interest in the Shares in which CIMC HK has an interest. (4) Mr Brian Chang owns 100% of the issued shares in each of Leung Kee Holdings Limited, Bright Touch Investment Limited and Yantai Shipyard Pte Ltd, all of whom collectively hold 38.24% of the issued shares in CIMC Offshore Holdings. As such, Mr Brian Chang is deemed to have an interest in the Shares in which CIMC Offshore Holdings has an interest. (5) Mr Chang Yee Meng Malcolm has agreed to waive all rights he has or may have under the Options. 15

18 LETTER TO SHAREHOLDERS 9. INDEPENDENT DIRECTORS RECOMMENDATION 9.1 Mr Mai Bo Liang, Mr Brian Chang, Mr Chang Yee Meng Malcolm, Mr Yu Ya, Mr Yu Yu Qun and Mr Wang Yu have refrained from voting on the decision of the Board to propose the Removal, and from making a recommendation on the Removal Resolution. Mr Mai Bo Liang, Mr Yu Ya, Mr Yu Yu Qun and Mr Wang Yu all hold executive positions in the CIMC Group, and CIMC holds indirectly approximately 61.76% of the shares in CIMC Offshore Holdings, CIMC Raffles major shareholder which requested for the Removal. Mr Brian Chang indirectly holds approximately 38.24% of the shares in CIMC Offshore Holdings, and Mr Chang Yee Meng Malcolm is the son of Mr Brian Chang. As such, the decision of the Board to propose the Removal was approved only by the Independent Directors, and such approval was unanimous. 9.2 In proposing the Removal, the Independent Directors have carefully considered, among other things, the rationale and implications of the Removal as set out in Section 4 and Section 5 respectively. In particular, the Independent Directors have noted that: (a) CIMC Offshore Holdings will not be making an exit offer to Shareholders in connection with the Removal but has undertaken not to purchase or acquire Shares as described in Section 3.3; and (b) upon the Removal, Shareholders would lose a channel that facilitates trading of the Shares and will likely find it difficult to sell their Shares. 9.3 Notwithstanding the matters highlighted in Section 9.2, the Independent Directors would note the following: (a) There is no requirement under the NOTC rules for an exit offer to be made in connection with a removal from the NOTC upon shareholders approval. Although no exit offer will be made by CIMC Offshore Holdings in connection with the Removal, CIMC Offshore Holdings had made the Offer in November In the Offer Document, CIMC Offshore Holdings had disclosed (among other things) that a general meeting may be convened to seek Shareholders approval for the removal of CIMC Raffles from the NOTC. As such, Shareholders have been made aware that the Removal may occur. Further, the Independent Directors would note that any further offer for the Shares in future, whether by CIMC Offshore Holdings or any other entity, would be subject to the Code and Shareholders would therefore be protected by the provisions of the Code where applicable. Please see further Section 9.3(f) below. (b) (c) In view of the undertaking of CIMC Offshore Holdings not to purchase or acquire Shares as described in Section 3.3, CIMC Offshore Holdings would not be able to acquire Shares on the NOTC in conjunction with the Removal without making a general offer to all Shareholders in compliance with the Code (as to which see further Section 9.3(f) below). As explained in Section 5.1, the NOTC is an information system for unlisted shares and not a stock exchange. Unlike a stock exchange where buy and sell orders are automatically matched at the prices entered into the system based on stipulated prioritisation rules, trading on the NOTC is conducted pursuant to agreement outside of the system and may not necessarily be at the indicative prices entered into the system. As such, while the information available on the system facilitates trading, it is not a trading platform like a stock exchange. 16

19 LETTER TO SHAREHOLDERS The Independent Directors believe that, in view of the foregoing and the small free float and historical low trading liquidity of the Shares on the NOTC, maintaining CIMC Raffles on the NOTC will not offer investors the opportunity to trade in meaningful volumes or with frequency within an active market. (d) Although the Distribution Agreement will be terminated and CIMC Raffles would cease to release relevant information on the NOTC website upon the Removal, CIMC Raffles will continue to release relevant information on its corporate website at With the continued release of relevant information on its corporate website, the Independent Directors do not expect that Shareholders will be adversely affected by relevant information ceasing to be released on the NOTC website. The Directors also wish to assure Shareholders that the Board remains committed to involving Shareholders in the growth of CIMC Raffles and that Shareholders will continue to be informed of relevant information relating to CIMC Raffles. (e) (f) CIMC Raffles is incorporated in Singapore and is subject to the provisions of the Companies Act. The Companies Act contains, among others, certain provisions that protect the interests of minority shareholders. Notwithstanding the Removal, Shareholders will, where applicable, continue to be protected by such provisions and may avail themselves of the remedies conferred by such provisions. Notwithstanding the Removal, CIMC Raffles continues to be subject to the provisions of the Code. The Code provides that apart from public listed companies with a primary listing in Singapore, unlisted public companies with more than 50 shareholders and net tangible assets of S$5 million or more must also observe the provisions of the Code, wherever this is possible and appropriate. CIMC Raffles satisfies these conditions and, as such, the Code applies to CIMC Raffles whether or not the Shares are traded over the NOTC. The Code regulates takeover and merger transactions, and its primary objective is fair and equal treatment of all shareholders in a takeover or merger transaction. As such, any takeover or merger transaction relating to CIMC Raffles will be subject to the Code, and Shareholders will continue to be protected by the provisions of the Code where applicable. (g) Notwithstanding the Removal, the Directors continue to be committed to ensure that high standards of corporate governance are practised by CIMC Raffles. CIMC Raffles has been using the Code of Corporate Governance 2005 issued by the Council on Corporate Disclosure and Governance (which is applicable to listed companies in Singapore) as a guide for its corporate governance practices. Since its admission to the NOTC in 2006, CIMC Raffles has disclosed in its annual reports its corporate governance practices with specific reference to the principles and guidelines of the Code of Corporate Governance CIMC Raffles will continue to be guided by the best practices after the Removal as far as practical. 9.4 Taking into account Sections 9.2 and 9.3, the Independent Directors are unanimously of the opinion that the Removal is in the best interests of CIMC Raffles. Accordingly, the Independent Directors recommend that Registered Shareholders vote in favour of the Removal Resolution at the EGM. 17

20 LETTER TO SHAREHOLDERS 9.5 All the Executive Directors are eligible to participate in the Scheme and are therefore interested in the proposed amendments to the Rules under Ordinary Resolution 2 set out in the Notice of EGM. The Executive Directors have abstained from making any recommendation to Shareholders on Ordinary Resolution 2. The non-executive Directors (being the Independent Directors), having considered, among other things, the reasons for the proposed amendments, are of the view that the proposed amendments are necessary and accordingly recommend that Registered Shareholders vote in favour of Ordinary Resolution 2 at the EGM. The passing of Ordinary Resolution 2 is conditional upon the passing of the Removal Resolution. This means that if the Removal Resolution is not approved, the Ordinary Resolution 2 would not be duly passed. 9.6 The Directors recommend that any individual Shareholder who may require specific advice in relation to his Shares should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser. 10. EXTRAORDINARY GENERAL MEETING The EGM, notice of which is set out on page 22 of this Circular, will be held at 9.30 a.m. on 16 February 2011, at No. 1 Claymore Drive, #08-04 Orchard Towers, Singapore for the purpose of considering and, if thought fit, passing, with or without any modification, the Ordinary Resolutions set out in the Notice of EGM. 11. ACTION TO BE TAKEN BY SHAREHOLDERS 11.1 If a Registered Shareholder is unable to attend the EGM and wishes to appoint a proxy to attend and vote on his behalf, he should complete, sign and return the attached proxy form in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the Share Registrar at 6 Temasek Boulevard, #29-00 Suntec Tower Four, Singapore , not later than 9.30 a.m. on 14 February The completion and return of the proxy form by a Registered Shareholder will not preclude him from attending and voting in person at the EGM in place of his proxy VPS Shareholders are not regarded as members of CIMC Raffles and are not entitled to attend the EGM to speak and vote thereat. However, VPS Shareholders may vote on the resolutions set out in the Notice of EGM through the VPS Registrar in the manner described in this Section This Circular, together with a form of voting instructions will be despatched by the VPS Registrar to VPS Shareholders. VPS Shareholders who wish to vote at the EGM should complete the form of voting instructions in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the VPS Registrar at DnB NOR Bank ASA, Registrars Department, Stranden 21,0021 Oslo, Norway (Fax: ) marked to the attention of K. G. Berg, not later than 9.30 a.m. (Norwegian time) on 10 February VPS Shareholders should note that the proxy form attached to this Circular is not for use by VPS Shareholders, and that any proxy form completed by VPS Shareholders and submitted to the Share Registrar will be rejected. 18

21 LETTER TO SHAREHOLDERS 11.3 Persons who hold Shares through a nominee are also not regarded as members of CIMC Raffles and are not entitled to attend the EGM to speak and vote thereat. Persons who hold Shares through nominees who are either Registered Shareholders or VPS Shareholders are advised to check with their respective nominees early to ascertain and comply with the procedure (if any) for voting on the Removal Resolution through these nominees. Persons who hold Shares through a nominee should note that the proxy form attached to this Circular is not for use by them, and that any proxy form completed by them and submitted to the Share Registrar will be rejected. Yours faithfully, For and on behalf of the Directors Mai Bo Liang Chairman and Executive Director CIMC Raffles Offshore (Singapore) Limited 19

22 APPENDIX The amendments that are proposed to be made to the Rules are set out below. For ease of reference, the full text of the relevant Rules and the manner in which they are amended are reflected. (a) Rule In the Scheme, unless the context otherwise requires, the following words and expressions shall have the following meanings: Exercise Price NOK Oslo OTC trading day The price at which a Participant shall subscribe for each Share upon the exercise of an Option as set out in Rule 7, and subject to any adjustments in accordance with Rule 12 provided always that such exercise price shall not be less than US$ per share or its equivalent in the currency in which it is offered. Norwegian Kroner The Over-The-Counter trade system in Oslo known as the Oslo OTC, a trading support system for registering buyer/ seller interests and trades in unlisted shares administered by The Association of Norwegian Stockbroking Companies and/or any other stock exchange as may be determined by the Committee. A day on which the Shares are traded on Oslo OTC. (b) Rule 7 Subject to any adjustment pursuant to Rule 12, the Exercise Price for each Share in respect of which an Option is exercisable shall be at a price in US$, NOK or S$ based on the prevailing spot exchange rate quoted by the Company s bank as determined by the Committee in its discretion. equivalent to the arithmetic average of the daily volume weighted average price of the Shares listed on the Oslo OTC during the period of three (3) trading days of the Oslo OTC ending on the day before the Date of Grant. (c) Rule The Company may but is not obliged to, apply to the Oslo OTC for permission to deal in and for quotation of such Shares. In the event the Company undertakes such application, all costs associated with the dealing and quotation of such Shares on the Oslo OTC shall be share rateably with all such Participants in accordance with the proportion of their Shares. Deleted. (d) Rule If a variation in the issued share capital of the Company (whether by way of a capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation, distribution or otherwise) shall take place, then: (a) the Exercise Price of the Shares, the class and/or number of Shares comprised in an Option to the extent unexercised; and/or 20