ENVIRO-HUB HOLDINGS LTD. (Reg. No E)

Transcription

1 ENVIRO-HUB HOLDINGS LTD. (Reg. No E) A. THE PROPOSED DISTRIBUTION IN SPECIE OF SHARES IN HLS ELECTRONICS PTE LTD TO SHAREHOLDERS OF THE COMPANY BY WAY OF CAPITAL REDUCTION B. THE PROPOSED FURTHER CAPITAL REDUCTION TO WRITE-OFF ACCUMULATED LOSSES 1. DISTRIBUTION IN SPECIE The Board of Directors (the Directors ) of Enviro-Hub Holdings Ltd. (the Company ) wishes to announce that HLS Electronics Pte Ltd ( HLS ), a 65% subsidiary of the Company, intends to apply to the Singapore Exchange Securities Trading Limited (the SGX-ST ) for a listing and quotation of its shares on the SGX-ST. In connection with the listing exercise, the Company will restructure its shareholding in HLS through a distribution in specie of the Company s entire 62% shareholding interest in HLS (the Distribution ) to the Company s shareholders (the Shareholders ). As at the date of this announcement, the Company has 65% shareholding interest in HLS. On 27 October 2006, the Directors had announced that the Company had entered into a sale and purchase agreement with Messrs Tan Tiong Hoe and Tan Mun Hoe for the sale of an aggregate of 30,000 shares representing 3% of the existing issue shared capital of HLS ( HLS Shares Sale ). This HLS Shares Sale is conditional upon HLS obtaining the eligibility-to-list letter from the SGX-ST for the listing of HLS Shares on the SGX-ST. Upon the completion of the HLS Shares Sale which will be prior to the Distribution, the Company s shareholding interest in HLS will decrease from 65% as at the date of this announcement to 62%. The Distribution will involve the said 62% shareholding interest in HLS. Following the Distribution, HLS will cease to be a subsidiary of the Company. The Distribution will be carried out by way of a capital reduction of the Company. Immediately after the Distribution, the Shareholders: will continue to hold their ordinary shares in the capital of the Company (the Shares ), which will remain listed on the Official List of the SGX-ST; and will hold ordinary shares in the capital of HLS (the HLS Shares ). The Company will not own any shares in HLS immediately after the Distribution. 2. INFORMATION ON HLS HLS is an e-waste resource recovery management company specialising in the recovery and recycling of engineering plastics from used IC trays. The business of HLS is segmented into 2 main categories:- Used IC trays Re-use recycling HLS recycles used IC trays by processing the trays for re-use.

2 Materials recovery and recycling HLS manufactures new IC trays under its proprietary brand, HLS Trays, using mainly recycled engineering plastic material obtained from used IC trays that cannot be processed for re-use. Electronic scraps Apart from used IC trays, HLS also trades in other types of electronic scraps. 3. THE ENVIRO-HUB GROUP The Company is an investment holding company for the Enviro-Hub group of companies (the Enviro-Hub Group ). The Company was listed on the SGX-ST on 5 October The core activities of the Enviro-Hub Group comprise: recovery and recycling of e-waste which is currently carried out by three subsidiaries as set out in the table below. EHH subsidiary HLS Cimelia e-hub Metals Recovery and recycling service Recycling and manufacturing of integrated circuit (IC) trays using recycled engineering plastic Recovery and refining of the platinum group of metals Recovery and processing of ferrous and non-ferrous metals, and melting and refining of copper construction-related businesses, namely (i) the rental and sale of heavy construction equipment and machinery, both locally and regionally; and (ii) the provision of piling services to the public and private sectors. 4. RATIONALE FOR THE DISTRIBUTION The Distribution will enable the Company to distribute its entire shareholdings in HLS to Shareholders. Once the Distribution is completed, the proposed listing of HLS will follow. The proposed listing of HLS will enhance the public image of HLS, both locally and internationally, allow greater access to capital and unlock shareholder value for the Company. Furthermore, it will provide liquidity for the HLS shares. Independent management The Distribution will remove potential conflicts of interests between HLS and the Enviro-Hub Group of companies. HLS will be independently managed with substantial control maintained by the existing HLS management. Direct investment opportunity in HLS Upon completion of the Distribution, Shareholders will be able to participate in the ownership of 2 separately listed companies without any additional cash outlay. In addition, Shareholders and potential investors would be able to invest in HLS directly. This will provide a better means to value the business of HLS separately, thereby better reflecting the underlying value and growth potential of the business.

3 5 THE DISTRIBUTION The Board of Directors of the Company recommends the distribution of all the HLS Shares, to which the Company would be entitled, to Shareholders. The distribution to Shareholders in proportion to their respective shareholdings in the Company as at a date to be determined by the Directors (the Books Closure Date ) will be effected by way of a distribution in specie, free of encumbrances and together with all rights attaching thereto on and from such date. Shareholders will not be required to make any payment for the HLS Shares received pursuant to the Distribution or to surrender or exchange their Shares in order to receive such HLS Shares. The number of HLS Shares to be distributed to Shareholders is dependent on, inter alia, the number of Shares in issue as at the Books Closure Date and any requirements which may be imposed by the SGX-ST in connection with the proposed listing and quotation of HLS Shares on the SGX-ST. Accordingly, it is not at present possible to determine the number of HLS Shares to which Shareholders would receive under the Distribution. The entitlements of Shareholders under the Distribution will be set out in the Circular (as defined in Section 11 below) to be dispatched to Shareholders. Overseas Shareholders The distribution of the HLS Shares to Shareholders whose registered addresses (as recorded in the Register of Members of the Company or in the Depository Register maintained by The Central Depository (Pte) Limited ( CDP ) are outside Singapore (the Overseas Shareholders ) may be prohibited or restricted by law in certain jurisdictions. Accordingly, where the Directors are of the view that the distribution of the HLS Shares to such Overseas Shareholders may infringe any relevant foreign law or necessitate compliance with any conditions or requirements which they in their absolute discretion regard as onerous or impracticable by reason of costs, delay or otherwise, such HLS Shares shall not be transferred to such Overseas Shareholders. They will instead be distributed to such person(s) as the Directors of the Company may appoint for the purposes of sale and the aggregate amount of the net proceeds (if any) thereof, shall (subject as may be set out in the Circular) be distributed proportionately to and among all such Overseas Shareholders in full satisfaction of their rights to the HLS Shares, and no Overseas Shareholder shall have any claim whatsoever (including in respect of any such sale) against the Company, its financial adviser, Omega Capital Limited ( Omega Capital ), and/or CDP in connection therewith. 6. PROPOSED FURTHER CAPITAL REDUCTION TO WRITE-OFF ACCUMULATED LOSSES Further, in order to streamline its capital structure, the Company is proposing to undertake a capital reduction exercise (the Capital Reduction ) pursuant to Section 78C of the Companies Act (Cap. 50) (the Act ), by way of cancellation of the Company s issued and paid-up share capital which is lost or unrepresented by available assets. As at 31 December 2006, the Company s issued and paid-up share capital was S$117,278,040. The Capital Reduction will involve a write-off of approximately S$17,006,644 in accumulated losses of the Company as at 31 December The Capital Reduction will result in the issued and paid-up share capital being reduced from

4 S$117,278,040 to S$100,271,396. The purpose of the Capital Reduction is to rationalise the balance sheet of the Company to more accurately reflect the value of its underlying assets and thus the financial position of the Company. In addition, the Company would be in a better position to retain future profits if the accumulated losses are written off. This will help the Company to return to a healthier balance sheet sooner. The Capital Reduction is not expected to have any financial effects on the earnings, net tangible assets and gearing of the Group. The Capital Reduction is subject to, the approval of Shareholders by way of a special resolution at the EGM to be convened. 7. FINANCIAL EFFECTS OF THE DISTRIBUTION For purposes of illustration only, the estimated proforma financial effects of the Distribution on selected financial measures and ratios of the Enviro-Hub Group are set out below, and have been computed based on the audited consolidated financial statements of the Enviro-Hub Group for FY2005. The estimated proforma financial effects have been arrived at after taking into account the HLS Shares Sale (excluding the loss to be recognized on disposal of 3% of the HLS shares) and assuming that the transaction costs incurred for the Distribution are insignificant and ignored for computational purposes and that the Distribution had taken place: for the purposes of the balance sheet, on 31 December 2005, being the date to which the latest audited full-year financial statements of the Enviro-Hub Group were made up; and for the purposes of the profit and loss account, on 1 January 2005, being the start of the latest complete financial year. As these financial effects are based on the Company s audited consolidated financial results for FY2005 and are presented for illustration purposes only, they may not reflect the actual future financial position or performance of the Proforma Enviro-Hub Group following the Distribution. 7.1 Share Capital There will be no change in the number of issued Shares as a result of the Distribution.

5 7.2 Net Tangible Assets (NTA) and Net Assets Value (NAV) Enviro-Hub Group as at 31 December 2005 (audited) Proforma Enviro-Hub Group after the Distribution NAV (S$'000) 1 83,335 48,669 NTA (S$ 000) 39,867 34,313 Number of Shares ( 000) 342, ,553 NAV per Share (cents) NTA per Share (cents) Notes: 1. NAV is computed based on the net assets of the Group after deduction of minority interests. 2. NTA is computed based on the net tangible assets of the Group after deduction of minority interests. 7.3 Earnings per Share (EPS) Enviro-Hub Group FY2005 (audited) 1 Proforma Enviro-Hub Group after the Distribution Net profit (S$ 000) 1,951 1,085 Weighted average number of issued shares for FY2005 ( 000) 227, ,432 2 EPS (cents) Notes: 1. HLS was acquired by the Company in August 2005 and accordingly 4 months of HLS results had been consolidated into the Enviro-Hub Group s financial results for FY The weighted average number of shares used in the computation of the proforma EPS is determined based on the assumption that shares were issued by the Company before 1 January 2005 in connection with the acquisition of HLS. 3. The proforma EPS does not take into account the estimated loss of approximately $174,227 to be recognised on disposal of the 3% HLS shares assuming the disposal took place on 31 December Gearing The Enviro-Hub Group is in a net positive cash position as at 31 December Following the Distribution, the Enviro-Hub Group is expected to remain in a net positive cash position. 8. CONDITIONS The Distribution and Capital Reduction are, inter alia, conditional upon the following:- the approval of Shareholders at an extraordinary general meeting of the Company to be convened (the EGM ); such other approvals, authorisations, consents and confirmations from the regulatory authorities as may be required or advisable and the same remaining in force, including without limitation such approvals from the SGX-ST and other third parties being obtained for or in connection with the Distribution, and if such approvals are given subject to any conditions, such conditions being acceptable to the Company; and

6 (c) the receipt by HLS of a conditional eligibility-to-list letter issued by the SGX-ST in connection with the admission of HLS to the Official List of the SGX-ST on conditions acceptable to the Company; and (d) the Company complying with the requirements under the Act in relation to the Distribution and the Capital Reduction. 9. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS No Director or substantial shareholder of the Company has any interest, direct or indirect, in the Distribution other than by reason of their shareholdings in the Enviro-Hub Group and their directorships in the Enviro-Hub Group and/or proposed directorships, if any, in HLS. 10. FINANCIAL ADVISER The Company has appointed Omega Capital as its financial adviser in respect of the Distribution and the Capital Reduction. 11. CIRCULAR AND NOTICE OF EGM A circular to shareholders (the Circular ) containing further details of the Distribution and the Capital Reduction together with the notice of the EGM, to seek Shareholders approval for the Distribution and Capital Reduction will be dispatched to Shareholders in due course. By Order of the Board Raymond Ng Ah Hua Executive Chairman