CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED

Transcription

1 OFFERING CIRCULAR DATED 12 SEPTEMBER 2011 THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX OR OTHER PROFESSIONAL ADVISER. This Offering Circular and the accompanying PALs (each term as defined herein) have not been and will not be approved by, lodged with or registered by any regulatory body or authority in any jurisdiction. In particular, this Offering Circular and the accompanying PALs do not constitute a prospectus or an offer information statement under the Securities and Futures Act, Chapter 289 of Singapore, and have not been approved by, lodged with or registered by the Monetary Authority of Singapore, and also do not constitute a prospectus under the Norwegian Securities Trading Act of 29 June 2007 and have not been reviewed or approved by or registered with the Register of Business Enterprises, the Financial Supervisory Authority of Norway or any other regulatory body or authority in Norway. No action has been or will be taken to permit an offer of the Rights Shares (as defined herein), or the possession, circulation or distribution of this Offering Circular or the accompanying PALs, in any jurisdiction where action would be required for that purpose. Accordingly, the Rights Shares may not be offered, sold or delivered, and this Offering Circular and the accompanying PALs may not be circulated or distributed, directly or indirectly, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. This Offering Circular and the accompanying PALs do not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended ( Securities Act )). The Rights Shares have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States or to, or for the account or benefit of, U.S. Persons absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No Rights Shares shall be allotted or allocated on the basis of this Offering Circular later than six months after the date of this Offering Circular. CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED (Incorporated in Singapore on 7 March 1994) (Registration Number D) NON-RENOUNCEABLE NON-UNDERWRITTEN RIGHTS ISSUE ( RIGHTS ISSUE ) OF 205,173,750 NEW ORDINARY SHARES ( RIGHTS SHARES ) IN THE CAPITAL OF CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED ( CIMC RAFFLES ), AT AN ISSUE PRICE OF US$0.50 FOR EACH RIGHTS SHARE, ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) EXISTING SHARES IN THE CAPITAL OF CIMC RAFFLES HELD AS AT THE BOOKS CLOSURE DATE (AS DEFINED HEREIN), ROUNDED DOWN TO THE NEAREST RIGHTS SHARE IMPORTANT DATE AND TIME Last date and time for acceptance of and (if applicable) application and payment for Rights Shares by Entitled Shareholders (as herein defined) : 22 September 2011 at 5.00 p.m., Singapore time

2 IMPORTANT NOTICE Capitalised terms used below which are not otherwise defined herein shall have the same meanings as ascribed to them under the section Definitions. For Entitled Registered Shareholders, acceptances of their provisional allotment of Rights Shares and (if applicable) applications for excess Rights Shares must be made through the Share Registrar. For Entitled Former VPS Shareholders on whose behalf DnB continues to hold the Former VPS Shares, DnB will renounce its provisional allotment of Rights Shares to each of them based on their shareholdings in the DnB Register to facilitate the direct participation by Entitled Former VPS Shareholders in the Rights Issue. Acceptances of the Rights Shares renounced by DnB and (if applicable) applications for excess Rights Shares by Entitled Former VPS Shareholders must also be made through the Share Registrar. For investors who hold Shares through a nominee who is an Entitled Registered Shareholder or an Entitled Former VPS Shareholder, acceptances of and (if applicable) excess applications for the Rights Shares must be done through the nominee. Such investors are advised to provide their respective nominees with the appropriate instructions early in order for such nominees to make the relevant acceptances of and (if applicable) excess applications for the Rights Shares on their behalf by the Closing Date. Any acceptance of and (if applicable) excess applications for the Rights Shares by such investors made directly through the Share Registrar and/or CIMC Raffles will be rejected. Persons wishing to subscribe for any Rights Shares offered by this Offering Circular should, before deciding whether to so subscribe, carefully read this Offering Circular in its entirety in order to make an informed assessment of, among other things, the assets and liabilities, profits and losses, financial position, financial performance, risk factors and prospects of CIMC Raffles and the CIMC Raffles Group, and the rights and liabilities attaching to the Rights Shares. They should rely, and shall be deemed to have relied, on their own independent enquiries and investigations of the assets and liabilities, profits and losses, financial position, financial performance, risk factors and prospects of CIMC Raffles and the CIMC Raffles Group, as well as any bases and assumptions upon which financial projections, if any, relating to CIMC Raffles or the CIMC Raffles Group are made or based, and their own appraisal and determination of the merits of investing in CIMC Raffles and the CIMC Raffles Group in the light of their personal circumstances (including financial and taxation affairs). No information in this Offering Circular constitutes, or shall be deemed or considered to constitute, investment, business, financial, legal, tax or other advice. Persons in doubt as to the action they should take should consult their investment, business, financial, legal, tax or other professional adviser before deciding whether to subscribe for the Rights Shares. No person has been authorised to give any information or to make any representations, other than those contained in this Offering Circular, in connection with the Rights Issue or the issue of the Rights Shares and, if given or made, such information or representations must not be relied upon as having been authorised by CIMC Raffles or the CIMC Raffles Group. Save as may be expressly stated in this Offering Circular, nothing contained herein is, or may be relied upon as, a promise or representation as to the future financial position, financial performance, prospects or policies of CIMC Raffles or the CIMC Raffles Group. Neither the delivery of this Offering Circular nor the provisional allotment of the Rights Shares or the issue of the Rights Shares shall, under any circumstances, constitute a continuing representation, or give rise to any implication, that there has been no material change in the affairs of CIMC Raffles or the CIMC Raffles Group, or any of the information contained herein, since the date hereof. Where such changes occur after the date hereof and are material, or are required to be disclosed by law, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at All Entitled Shareholders should take note of any such announcement and, upon the release of such announcement, shall be deemed to have notice of such changes. i

3 IMPORTANT NOTICE CIMC Raffles makes no representation or warranty to any person regarding the legality of an investment in the Rights Shares and/or the Shares by such person under any investment or any other laws or regulations. CIMC Raffles is not making any representation, warranty or recommendation whatsoever as to the merits of the Rights Issue, the Rights Shares, the Shares, CIMC Raffles, the CIMC Raffles Group or any other matter relating thereto or in connection therewith. Nothing in this Offering Circular or its accompanying documents shall be construed as a recommendation to subscribe for, acquire or invest in the Rights Shares and/or the Shares. This Offering Circular and the accompanying documents have been prepared solely for the purpose of the acceptance of and excess application for the Rights Shares by Entitled Shareholders through the Share Registrar under the Rights Issue, and may not be relied upon by any persons (other than Entitled Shareholders) or for any other purpose. This Offering Circular, including the respective PALs, may not be used for the purpose of, and do not constitute, an offer or invitation to or solicitation by anyone in any jurisdiction or in any circumstances in which such an offer, invitation or solicitation is unlawful or not authorised or to any person to whom it is unlawful to make such an offer, invitation or solicitation. The distribution of this Offering Circular and/or its accompanying documents may be prohibited or restricted by law (either absolutely or subject to various requirements, whether legal or administrative, being complied with) in certain jurisdictions under the relevant laws of those jurisdictions. Entitled Shareholders or any other persons having possession of this Offering Circular are advised to keep themselves informed of and observe such prohibitions and restrictions at their own expense and without liability to CIMC Raffles, the Share Registrar or DnB. Please refer to the section Eligibility of Shareholders to Participate in the Rights Issue for further information. ii

4 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS All statements contained in this Offering Circular, statements made in public announcements, press releases and oral statements that may be made by CIMC Raffles or its Directors, officers or employees acting on its behalf, that are not statements of historical fact, constitute forward-looking statements. Some of these statements can be identified by words that have a bias towards the future, or are forwardlooking, such as anticipate, believe, could, estimate, expect, forecast, if, intend, may, plan, possible, probable, project, should, will and would or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding the CIMC Raffles Group s expected financial position, business strategy, future plans and prospects are forwardlooking statements. These forward-looking statements, including statements as to the CIMC Raffles Group s revenue and profitability, prospects, future plans and other matters discussed in this Offering Circular regarding matters that are not historical facts, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the CIMC Raffles Group s actual future results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by such forward-looking statements. Given the risks and uncertainties that may cause the CIMC Raffles Group s actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Offering Circular, undue reliance must not be placed on these statements. The CIMC Raffles Group s actual results, performance or achievements may differ materially from those anticipated in these forward-looking statements. Neither CIMC Raffles nor any other person represents or warrants that the CIMC Raffles Group s actual future results, performance or achievements will be as discussed in those statements. Further, CIMC Raffles disclaims any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. Where such developments, events or circumstances occur and are material, or are required to be disclosed by law, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at iii

5 CORPORATE INFORMATION Directors : Mai Bo Liang (Executive Chairman and Chief Executive Officer) Brian Chang (Executive Deputy Chairman) Yu Ya (Executive Director and President) Chang Yee Meng Malcolm (Executive Director) Wang Yu (Executive Director) Yu Yu Qun (Executive Director) Liu Chee Ming (Independent Director) Yu Ning (Independent Director) Zhang Li Min (Independent Director) Registered Address : 1 Claymore Drive #08-04 Orchard Towers Rear Block Apartment Singapore Principal Place of Business : No. 70 Zhifu East Road Zhifu Island, Zhifu District Yantai Shandong People s Republic of China Legal Adviser to the Company on Singapore Laws : Kelvin Chia Partnership 6 Temasek Boulevard 29 th Floor Suntec Tower Four Singapore Share Registrar : Kinetica Pte. Ltd. 6 Temasek Boulevard 29 th Floor Suntec Tower Four Singapore Receiving Bank : Standard Chartered Bank 8 Marina Boulevard Level 24 Marina Bay Financial Centre Tower 1 Singapore iv

6 CONTENTS PAGE DEFINITIONS... 2 EXPECTED TIMETABLE OF KEY EVENTS... 6 LETTER FROM THE BOARD... 7 SUMMARY OF RIGHTS ISSUE SUMMARY OF THE BUSINESS OF THE CIMC RAFFLES GROUP RISK FACTORS ELIGIBILITY OF SHAREHOLDERS TO PARTICIPATE IN THE RIGHTS ISSUE SELLING RESTRICTIONS TAKE-OVER LIMITS USE OF PROCEEDS INFORMATION ON THE CIMC RAFFLES GROUP OPERATING AND FINANCIAL REVIEW ADDITIONAL INFORMATION ON THE RIGHTS ISSUE APPENDICES A AUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR FY2009 AND FY B AUDITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER C AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR FY D PROCEDURES FOR ENTITLED SHAREHOLDERS

7 DEFINITIONS In this Offering Circular and the PALs, the following definitions shall apply throughout unless the context otherwise requires or unless otherwise stated: 2010 Rights Issue : The rights issue undertaken by CIMC Raffles in July 2010 which raised net proceeds of approximately US$100.3 million Articles : The Articles of Association of CIMC Raffles, as amended or modified from time to time Board : The board of Directors as at the date of this Offering Circular Books Closure Date : 5.00 p.m. on 7 September 2011, being the time and date at and on which the Register of Members and Share Transfer Books of CIMC Raffles and the DnB Register will be closed to determine the provisional allotment of Rights Shares of Entitled Registered Shareholders under the Rights Issue and the number of Rights Shares to be renounced by DnB to Entitled Former VPS Shareholders CIMC : China International Marine Containers (Group) Co., Ltd. CIMC HK : China International Marine Containers (Hong Kong) Limited CIMC Offshore Holdings : CIMC Offshore Holdings Limited CIMC Raffles : CIMC Raffles Offshore (Singapore) Limited CIMC Raffles ESOS : The CIMC Raffles Offshore (Singapore) Limited Executive Share Option Scheme approved and adopted by CIMC Raffles at an extraordinary general meeting held on 21 June 2006 and amended at an extraordinary general meeting held on 16 February 2011 CIMC Raffles Group : CIMC Raffles and its subsidiaries Closing Date : 5.00 p.m. on 22 September 2011, or such other time(s) and/or date(s) as may be announced from time to time by CIMC Raffles, being the last time and date for acceptance of, and (if applicable) excess application and payment for, the Rights Shares through the Share Registrar Code : The Singapore Code on Take-overs and Mergers, as amended or modified from time to time 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 Offering Circular DnB : DnB NOR Bank ASA, Registrar Department DnB Register : The register of Former VPS Shareholders that is maintained by DnB 2

8 DEFINITIONS Entitled Former VPS Shareholders Entitled Registered Shareholders : Former VPS Shareholders as at the Books Closure Date whose registered addresses in the DnB Register are in Singapore or Norway, and such other Former VPS Shareholders as at the Books Closure Date with registered addresses in the DnB Register outside Singapore and Norway where CIMC Raffles is satisfied, at its absolute discretion, that they are not precluded from being offered the Rights Shares either unconditionally or after compliance with conditions which it regards as acceptable : Registered Shareholders as at the Books Closure Date whose registered addresses with CIMC Raffles are in Singapore or Norway, and such other Registered Shareholders as at the Books Closure Date with registered addresses outside Singapore and Norway where CIMC Raffles is satisfied, at its absolute discretion, that it is not precluded from offering the Rights Shares to those Registered Shareholders either unconditionally or after compliance with conditions which it regards as acceptable Entitled Shareholders : Entitled Registered Shareholders and Entitled Former VPS Shareholders Former VPS Shareholders : Persons who are registered in the DnB Register as holders of beneficial interests in the Former VPS Shares Former VPS Shares : Shares registered in the name of DnB in the Register of Members of CIMC Raffles and held by DnB as nominee for the Former VPS Shareholders, and which were previously registered in the VPS and traded on the NOTC FY : Financial year ended or, as the case may be, ending 31 December Irrevocable Undertaking : The irrevocable undertaking dated 1 September 2011 given by CIMC Offshore Holdings to CIMC Raffles in relation to the Rights Issue, as described in paragraph 4.6 of the section Additional Information on the Rights Issue Issue Price : The issue price of the Rights Shares, being US$0.50 for each Rights Share Latest Practicable Date : 7 September 2011, being the latest practicable date prior to the printing of this Offering Circular NAV : Net asset value Non-Entitled Shareholders : Registered Shareholders other than Entitled Registered Shareholders, and Former VPS Shareholders other than Entitled Former VPS Shareholders NOTC : The Norwegian Over-The-Counter system administered and operated by the Norwegian Securities Dealers Association Offering Circular : This document together with (where the context requires) the PALs and all other accompanying documents, including any supplementary or replacement document, which may be issued by CIMC Raffles in connection with the Rights Issue 3

9 DEFINITIONS PAL A : Provisional allotment letter issued to Entitled Registered Shareholders (other than DnB) setting out the provisional allotment of Rights Shares of such Entitled Registered Shareholders under the Rights Issue PAL B : Provisional allotment letter setting out the provisional allotment of Rights Shares of DnB and pursuant to which DnB renounces such Rights Shares to Entitled Former VPS Shareholders PALs : PAL A and PAL B PRC : People s Republic of China Registered Shareholders : Registered holders of Shares, including DnB, named in the Register of Members of CIMC Raffles Rights Issue : Non-renounceable non-underwritten rights issue by CIMC Raffles of 205,173,750 Rights Shares at the Issue Price, on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date, rounded down to the nearest Rights Share, on the terms and the conditions of this Offering Circular Rights Shares : 205,173,750 new Shares to be allotted and issued by CIMC Raffles pursuant to the Rights Issue SFA : Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time Shares : Issued and paid-up ordinary shares in the capital of CIMC Raffles Share Options Options to subscribe for Shares granted under the CIMC Raffles ESOS Share Registrar : Kinetica Pte. Ltd. Subscription Period : The period from 12 September 2011 to the Closing Date, during which Entitled Shareholders may accept and (if applicable) apply and pay for the Rights Shares through the Share Registrar 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 US : United States of America VPS : Verdipapirsentralen, or Norwegian Central Securities Depository Yantai CIMC Raffles : Yantai CIMC Raffles Offshore Ltd., a subsidiary of CIMC Raffles : Euro dollar RMB : Renminbi S$ and cents : Singapore dollar and cents, respectively 4

10 DEFINITIONS US$ and US cents : United States dollar and cents, respectively % or per cent : Percentage or per centum 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 day in this Offering Circular and the PALs shall be a reference to Singapore time unless otherwise stated. Any reference to a date and/or time in this Offering Circular and the PALs in relation to the Rights Issue (including but not limited to the Closing Date) shall include such other date(s) and/or time(s) as may be announced from time to time by CIMC Raffles. Any reference in this Offering Circular and the PALs 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 the SFA, or any modification thereof, and used in this Offering Circular shall, where applicable, have the meanings ascribed to them respectively under the Companies Act, the SFA, or such modification thereof, as the case may be, unless otherwise provided. Any discrepancies in figures included in this Offering Circular between the amounts listed and the totals thereof are due to rounding. Accordingly, figures shown as totals in this Offering Circular may not be an arithmetic aggregation of the figures that precede them. 5

11 EXPECTED TIMETABLE OF KEY EVENTS The important dates and times (Singapore time) for the Rights Issue are as follows: Books Closure Date : 7 September 2011 at 5.00 p.m. Despatch of Offering Circular and PALs to Entitled Shareholders : 12 September 2011 Commencement of Subscription Period : 12 September 2011 Closing Date : 22 September 2011 at 5.00 p.m. Expected date for issue of Rights Shares : 27 September 2011 The above timetable is indicative only and is subject to change. As at the date of this Offering Circular, CIMC Raffles does not expect the above timetable to be modified. However, CIMC Raffles may modify the above timetable subject to any limitation under any applicable laws. In such an event, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at 6

12 LETTER FROM THE BOARD 12 September 2011 Directors: Mai Bo Liang (Executive Chairman and Chief Executive Officer) Brian Chang (Executive Deputy Chairman) Yu Ya (Executive Director and President) Chang Yee Meng Malcolm (Executive Director) Wang Yu (Executive Director) Yu Yu Qun (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, RIGHTS ISSUE TO RAISE GROSS PROCEEDS OF US$102.6 MILLION 1. Introduction On 1 September 2011, we announced a capital raising through the Rights Issue to raise gross proceeds of approximately US$102.6 million. Under the Rights Issue, Entitled Registered Shareholders will be entitled to subscribe for one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date, and Entitled Former VPS Shareholders will be entitled to subscribe for one (1) Rights Shares for every two (2) existing Former VPS Shares held by DnB on their behalf as at the Books Closure Date, at the Issue Price of US$0.50 for each Rights Share. 2. Rationale 2.1 CIMC Raffles undertook the 2010 Rights Issue in the second half of FY2010 and raised net proceeds of approximately US$100.3 million. 2.2 Since then, the CIMC Raffles Group has reported a net loss attributable to shareholders of approximately US$158.2 million in FY2010, as compared with a net profit attributable to shareholders of approximately US$18.8 million in FY2009, and for the six months ended 30 June 2011, the CIMC Raffles Group has incurred an unaudited net loss attributable to shareholders of approximately US$72.3 million. In addition, the borrowings of the CIMC Raffles Group have increased from approximately US$633.1 million as at 31 December 2009 to approximately US$923.8 million as at 31 December 2010 and approximately US$1,346.7 million as at 30 June 2011, and gearing ratio of the CIMC Raffles Group has also increased from 1.18 as at the end of FY2009 to 2.22 as at the end of FY2010 and 3.46 as at 30 June Please see further the section Operating and Financial Review. 2.3 After careful consideration, the Directors have decided to undertake the Rights Issue to (a) repay part of its bank borrowings, lower its gearing ratio and strengthen its balance sheet, (b) improve facilities at its existing shipyards, and (c) fund working capital requirements. Please see further the section Use of Proceeds on the use of proceeds from the Rights Issue. 3. Value Proposition for Shareholders 3.1 The capital raising is undertaken through a rights issue which would enable Entitled Shareholders to maintain their proportionate shareholdings in CIMC Raffles. 3.2 The Issue Price represents a discount of approximately: (a) 46.2% to CIMC Raffles NAV per Share of approximately US$0.93 as at 31 December 2010, based on CIMC Raffles audited consolidated financial statements for FY2010; 7

13 LETTER FROM THE BOARD (b) (c) (d) 36.7% to CIMC Raffles pro forma post-rights Issue NAV per Share of approximately US$0.79 (based on the audited NAV as at 31 December 2010 and taking into account the net proceeds from the Rights Issue of approximately US$102.4 million); 34.2% to CIMC Raffles NAV per Share of approximately US$0.76 as at 30 June 2011, based on CIMC Raffles unaudited consolidated financial statements for the six months ended 30 June 2011; and 25.4% to CIMC Raffles pro forma post-rights Issue NAV per Share of approximately US$0.67 (based on the unaudited NAV as at 30 June 2011 and taking into account the net proceeds from the Rights Issue of approximately US$102.4 million). 3.3 The Rights Issue is non-renounceable and, save for DnB as described in paragraph 3.4 below, Entitled Shareholders will not be able to renounce their provisional allotment of Rights Shares. 3.4 In order solely to facilitate the direct participation by Entitled Former VPS Shareholders in the Rights Issue, arrangement has been made for DnB (as the registered holder of the Former VPS Shares) to renounce its provisional allotment of Rights Shares to Entitled Former VPS Shareholders, based on the shareholdings of Entitled Former VPS Shareholders in the DnB Register. Entitled Former VPS Shareholders will not be permitted to further renounce the Rights Shares renounced by DnB to them. 3.5 Entitled Shareholders may apply for additional Rights Shares in excess of their provisional allotment of Rights Shares or the Rights Shares that are renounced by DnB to them (as the case may be). 3.6 The Board believes that the Rights Issue is in the best interests of shareholders and the CIMC Raffles Group as a whole. 4. Principal Terms of Rights Issue 4.1 The Rights Shares will be offered on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date. Based on the total number of 410,347,500 issued Shares as at the Latest Practicable Date, an aggregate of 205,173,750 Rights Shares will be allotted and issued pursuant to the Rights Issue. 4.2 The issue of the Rights Shares will be made pursuant to the authority granted under the terms of the general share issue mandate approved by Registered Shareholders at the Annual General Meeting of CIMC Raffles held on 6 June The Rights Shares will, upon allotment and issue, rank pari passu in all respects with the existing Shares, save for any dividends, rights, allotments or other distributions, the record date for which falls before the date of issue of the Rights Shares. 5. Financial Effects After the completion of the Rights Issue: (a) the total number of issued Shares will increase from 410,347,500 Shares to 615,521,250 Shares. As at the Latest Practicable Date, the total issued and paid-up share capital of CIMC Raffles is reflected in two separate S$ and US$ amounts, being S$594,416, and US$100,535, , because the consideration for the Shares issued pursuant to the 2010 Rights Issue was in US$. As the consideration for the Rights Shares is in US$, after completion of the Rights Issue, the portion of the total issued and paid-up share capital reflected in US$ will increase from US$100,535, to US$203,122,012.50, while the portion of the total issued and paid-up share capital reflected in S$ will remain as S$594,416,914.82; 1 Based on filings made with the Accounting and Corporate Regulatory Authority of Singapore. 8

14 LETTER FROM THE BOARD (b) (c) (d) the loss per Share (based on the audited loss net of tax after minority interest for FY2010) will decrease from approximately US$0.48 to approximately US$0.34; the NAV per Share (based on the audited NAV as at 31 December 2010) will be reduced from approximately US$0.93 to approximately US$0.79; and the gearing of the CIMC Raffles Group will be reduced from approximately 2.22 as at 31 December 2010 to approximately Please see paragraph 4 on Financial Effects of the Rights Issue in the section Operating and Financial Review for further information. 6. Irrevocable Undertaking As at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly approximately 83.55% of the total number of issued Shares. CIMC Offshore Holdings has given the Irrevocable Undertaking to CIMC Raffles, pursuant to which it undertook (among other things) to accept, subscribe and pay for and/or procure the acceptance, subscription and payment for all of its entitlements under the Rights Issue in full, and to apply, subscribe and pay for and/or procure the application, subscription and payment for such number of Rights Shares in excess of its entitlements under the Rights Issue as are not subscribed and paid for by other CIMC Raffles shareholders. CIMC Offshore Holdings will rank last in priority in the allocation of excess Rights Shares. In view of the Irrevocable Undertaking, the Rights Issue is not underwritten by any financial institution. 7. What you need to do 7.1 The last time and date for acceptances of and (if applicable) excess applications and payment for the Rights Shares by Entitled Shareholders is 5.00 p.m. on 22 September The procedures, and terms and conditions, for acceptances, excess applications and payment by Entitled Shareholders are set out in Appendix D to this Offering Circular. 7.2 If you are in any doubt as to the action you should take, you should immediately seek your own financial or other advice from your stockbroker, bank manager, solicitor or other independent professional adviser. 7.3 Your attention is drawn to the other information contained in this Offering Circular (of which this letter forms a part). Please note that you are advised to read this Offering Circular in its entirety and not rely solely on the summary information contained in this letter. Yours faithfully, Mai Bo Liang Executive Chairman and Chief Executive Officer CIMC Raffles Offshore (Singapore) Limited 9

15 SUMMARY OF RIGHTS ISSUE The following is a summary of the principal terms and conditions of the Rights Issue and is derived from, and should be read in conjunction with, the full text of this Offering Circular, and is qualified in its entirety by reference to information appearing elsewhere in this Offering Circular. Basis of Provisional Allotment Arrangement for Entitled Former VPS Shareholders : The Rights Issue is made on a non-renounceable non-underwritten basis to Entitled Registered Shareholders on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date, rounded down to the nearest Rights Share. Entitled Registered Shareholders (other than DnB as described below) will not be permitted to renounce their provisional allotment of Rights Shares. : In order solely to facilitate the direct participation by Entitled Former VPS Shareholders in the Rights Issue, arrangement has been made for DnB (as the registered holder of the Former VPS Shares) to renounce its provisional allotment of Rights Shares to Entitled Former VPS Shareholders, on the basis of one (1) Rights Shares for every two (2) existing Former VPS Shares reflected to be held by DnB on behalf of Entitled Former VPS Shareholders in the DnB Register, rounded down to the nearest Rights Share. Entitled Former VPS Shareholders will not be permitted to further renounce the Rights Shares renounced by DnB to them. Issue Price : US$0.50 for each Rights Share. Discount : The Issue Price represents a discount of approximately: (a) (b) (c) (d) 46.2% to CIMC Raffles NAV per Share of approximately US$0.93 as at 31 December 2010, based on CIMC Raffles audited consolidated financial statements for FY2010; 36.7% to CIMC Raffles pro forma post-rights Issue NAV per Share of approximately US$0.79 (based on the audited NAV as at 31 December 2010 and taking into account the net proceeds from the Rights Issue of approximately US$102.4 million) ; 34.2% to CIMC Raffles NAV per Share of approximately US$0.76 as at 30 June 2011, based on CIMC Raffles unaudited consolidated financial statements for the six months ended 30 June 2011; and 25.4% to CIMC Raffles pro forma post-rights Issue NAV per Share of approximately US$0.67 (based on the unaudited NAV as at 30 June 2011 and taking into account the net proceeds from the Rights Issue of approximately US$102.4 million). Rationale and Use of Proceeds : The Rights Issue is being undertaken by CIMC Raffles to (a) repay part of its bank borrowings, lower its gearing ratio and strengthen its balance sheet, (b) improve facilities at its existing shipyards, and (c) fund working capital requirements. Please see the section Use of Proceeds for further information. 10

16 SUMMARY OF RIGHTS ISSUE Number of Rights Shares to be issued : 205,173,750 Rights Shares to be allotted and issued, based on the total number of 410,347,500 issued Shares as at the Latest Practicable Date. The issue of the Rights Shares will be made pursuant to the authority granted under the terms of the general share issue mandate approved by Registered Shareholders at the Annual General Meeting of CIMC Raffles held on 6 June Estimated Net Proceeds : Based on the total number of 410,347,500 issued Shares as at the Latest Practicable Date, the Rights Issue will raise gross proceeds of approximately US$102.6 million, and the estimated net proceeds from the Rights Issue after deducting estimated expenses of approximately US$0.2 million are expected to be approximately US$102.4 million. Status of the Rights Shares : The Rights Shares will, upon allotment and issue, rank pari passu in all respects with the existing Shares, save for any dividends, rights, allotments or other distributions, the record date for which falls before the date of issue of the Rights Shares. Eligibility to Participate in the Rights Issue Acceptance, Excess Application and Payment by Entitled Shareholders : Please refer to the section Eligibility of Shareholders to Participate in the Rights Issue. : Entitled Registered Shareholders will be at liberty to accept or decline their provisional allotment of Rights Shares, and will be eligible to apply for additional Rights Shares in excess of their provisional allotment of Rights Shares, using the PAL A during the Subscription Period. Entitled Former VPS Shareholders will be at liberty to accept or decline the Rights Shares renounced by DnB to them, and will be eligible to apply for additional Rights Shares in excess of the Rights Shares renounced by DnB to them, using the PAL B during the Subscription Period. The procedures for, and terms and conditions applicable to, acceptance, excess application and payment by Entitled Shareholders are set out in Appendix D to this Offering Circular and the respective PALs. Excess Rights Shares : Disregarded fractional entitlements of Rights Shares will be aggregated with entitlements to the Rights Shares which are not allotted or otherwise taken up for any reason and shall be used to satisfy excess applications for Rights Shares (if any) or otherwise dealt with in such manner as the Directors may in their absolute discretion deem fit in the interests of CIMC Raffles. In the allotment of excess Rights Shares, Substantial Shareholders and Directors will rank last. 11

17 SUMMARY OF RIGHTS ISSUE Irrevocable Undertaking : CIMC Offshore Holdings holds directly and indirectly approximately 83.55% of the total number of issued Shares as at the Latest Practicable Date and has given to CIMC Raffles the Irrevocable Undertaking, pursuant to which it undertook (among other things) to accept, subscribe and pay for and/or procure the acceptance, subscription and payment for all of its entitlements under the Rights Issue in full, and to apply, subscribe and pay for and/or procure the application, subscription and payment for such number of Rights Shares in excess of its entitlements under the Rights Issue as are not subscribed and paid for by other CIMC Raffles shareholders. In the allotment of excess Rights Shares, CIMC Offshore Holdings will rank last. Governing Law : Laws of Singapore In view of the Irrevocable Undertaking, the Rights Issue is not underwritten by any financial institution. Please see paragraph 4.6 of the section Additional Information on the Rights Issue for further information. 12

18 SUMMARY OF THE BUSINESS OF THE CIMC RAFFLES GROUP This summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all the information that may be important to an investor before deciding to invest in the Rights Shares. Investors should read this entire Offering Circular carefully and the section Risk Factors before making an investment decision. OVERVIEW OF THE CIMC RAFFLES GROUP CIMC Raffles was incorporated on 7 March 1994 in Singapore under the Companies Act as a private limited company under the name of The China Gas & Power Corporation Pte Ltd which was subsequently changed to Ansalventure Pte Ltd and then to Taisun Shipyard Pte Ltd. On 7 October 1997, its name was further changed to Yantai Raffles Shipyard Pte. Ltd. Subsequently, it was converted to a public limited company on 28 April 2006 and its name was changed to Yantai Raffles Shipyard Limited. CIMC Raffles adopted its present name, CIMC Raffles Offshore (Singapore) Limited, on 11 June 2010, to reflect that CIMC has become the indirect controlling shareholder of CIMC Raffles following the voluntary unconditional cash offer described below. The CIMC Raffles Group is one of the largest offshore shipyards in the PRC, and also carries on other related business as mentioned below. It carries on its operations primarily in shipyards located in the PRC. In November 2008, CIMC completed the acquisition of its initial 10% stake in CIMC Raffles, and subsequently increased its stake in CIMC Raffles to approximately 18.3% through open market purchases on the NOTC. Pursuant to a voluntary unconditional cash offer for CIMC Raffles by CIMC Offshore Holdings launched in November 2009 and which closed in January 2010, and certain transactions between entities controlled by CIMC and entities controlled by Mr Brian Chang, CIMC became the controlling shareholder of CIMC Raffles and held directly and indirectly approximately 81.96% of the total issued Shares at that time. CIMC Offshore Holdings was then controlled indirectly as to approximately 61.02% by CIMC and indirectly as to approximately 38.98% by Mr Brian Chang. Following the 2010 Rights Issue, and as at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly approximately 83.55% of the total number of issued Shares. CIMC Offshore Holdings is in turn controlled indirectly as to approximately 61.76% by CIMC and indirectly as to approximately 38.24% by Mr Brian Chang. 2 CIMC was incorporated in 1980 in Shenzhen, PRC, and was listed on the Shenzhen Stock Exchange in CIMC is a leading manufacturer and supplier of containers, trailers, tank equipment, petrol chemical equipment, transportation, liquid natural gas and airport boarding bridges. It has over 100 subsidiaries in China, North America, Europe, Asia and Australia. The Shares were traded on the NOTC between 2006 and In February 2011, CIMC Raffles sought and obtained the approval of Registered Shareholders for its removal from the NOTC. CIMC Raffles was removed from the NOTC, and the Shares ceased to be traded on the NOTC, after the close of trading on 28 February 2011 (Norwegian time). As at the Latest Practicable Date, the Shares are not traded on the NOTC or any stock or securities exchange. BUSINESS OF THE CIMC RAFFLES GROUP The CIMC Raffles Group operates one of the largest offshore shipyards in the PRC. The CIMC Raffles Group designs and builds facilities for the offshore oil and gas and international marine industry. The CIMC Raffles Group is able to produce a wide range of offshore marine facilities, including semisubmersible drilling rigs, jack-up drilling rigs, heavy lift carriers, pipelay vessels, fall pipe vessels, accommodation barges, platform supply vessels, floating production storage and off-loading vessels, floating storage and off-loading vessels, permanent floating production units and anchor handling supply tug vessels. 2 CIMC Raffles has been informed that the issue of shares in CIMC Offshore Holdings that will result in the shareholding interest of CIMC and Mr Brian Chang in CIMC Offshore Holdings being changed from approximately 61.02% and approximately 38.98% respectively, to approximately 61.76% and 38.24% respectively, is in progress but has not been completed as at the Latest Practicable Date. 13

19 SUMMARY OF THE BUSINESS OF THE CIMC RAFFLES GROUP The main shipyard of the CIMC Raffles Group, which is held through Yantai CIMC Raffles Shipyard Co., Ltd and Yantai CIMC Raffles, is located in Yantai, Shandong and spans more than 333,000 square metres. The Yantai shipyard is equipped with large state-of-the-art offshore marine construction infrastructure, including the dual-beam gantry crane Taisun ( 泰山 ), which is the world s largest crane with a lifting capacity of 20,000 metric tonnes and has won several engineering and technological awards as well as achieved the world s heaviest weight lifted by a crane. The CIMC Raffles Group has a second shipyard, held through Haiyang CIMC Raffles Offshore Ltd, which is located in Haiyang, Shandong. The Haiyang shipyard has an existing land area of approximately 430,000 square metres and became operational sometime in In April 2010, the CIMC Raffles Group through Yantai CIMC Raffles completed the acquisition of a shipyard located at Longkou, Shandong, through the acquisition of the entire equity interest in Longkou Sanlian Offshore Engineering Co., Ltd (which has since been renamed Longkou CIMC Raffles Offshore Ltd). The Longkou shipyard has an existing land area of more than 413,000 square metres. Apart from its main business described above, the CIMC Raffles Group is also engaged in the following businesses: Chartering Business. The CIMC Raffles Group carries on a chartering business for both the local PRC and international markets. Repairs and Conversions. The CIMC Raffles Group repairs and converts a range of offshore marine facilities, such as semi-submersible drilling platforms, semi-submersible barges, jack-up drilling rigs, floating cranes, bulk carriers and oil tankers. Heavy Lift Craneage. The dual-beam gantry crane Taisun mentioned above serves not only the mating needs of the CIMC Raffles Group in its building activities, but also provides opportunities for third party shipyards with lesser lifting capacity to access the technology of the gantry crane. Yachts. The CIMC Raffles Group constructs and sells luxury mega yachts. 14

20 RISK FACTORS The risks described below and all other information contained in this Offering Circular should be carefully considered before making an investment decision in relation to the Rights Shares. The risks described below are not the only risks faced by the CIMC Raffles Group. Some risks are not yet known to the CIMC Raffles Group and there may be others which are currently believed not to be material but may subsequently turn out to be so. If any of these risks develops into actual events, the financial position, results, cashflow, business operations and prospects of the CIMC Raffles Group (collectively referred to as Business in this section) and any investment in the Shares or the Rights Shares could be, directly or indirectly, materially and adversely affected. In the event that this occurs, the value of the Shares or the Rights Shares could fluctuate or decline and all or part of any investment in the Shares or the Rights Shares may be lost. This Offering Circular contains forward-looking statements relating to events that involve risks and uncertainties. The CIMC Raffles Group s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by the CIMC Raffles Group as described in this section and elsewhere in this Offering Circular. Please also see the section Cautionary Note on Forward-Looking Statements. RISKS ASSOCIATED WITH THE CIMC RAFFLES GROUP S INDUSTRY AND BUSINESS The CIMC Raffles Group is highly dependent on the level of offshore exploration by oil and gas companies The CIMC Raffles Group derives a significant portion of its revenues and cash flow from the sale of offshore marine facilities, which are highly dependent on conditions of the oil and gas industry, and in particular, the ability and willingness of oil and gas companies to make capital expenditures to explore for, develop and produce crude oil and gas. Generally, capital expenditures by oil and gas companies fluctuate as a result of current or anticipated fluctuations in the prices of oil and gas as well as other factors, including: the availability of and demand for attractive oil and gas fields for economic exploration and production; the impact of political instability or armed hostilities involving one or more oil and gas producing nations; the cost of exploring for, producing and delivering oil and gas; level of drilling activity; the cost of developing alternative energy sources such as biofuels, solar power, wind power, nuclear power and other sources; technological advances affecting oil and gas consumption; governmental regulations, in particular trade laws, tax policies and environmental regulations; and the overall global economic environment. The CIMC Raffles Group derives most of its revenues from customers in the oil and gas industry. The oil and gas industry has historically experienced periodic downturns. Declining oil or gas prices or declining demand for oil or gas can depress offshore exploration, development and production activities and result in decreased spending by the CIMC Raffles Group s customers in the oil and gas industry, which could result in a decline in the demand for its offshore marine facilities and thus have a substantial negative effect on the Business of the CIMC Raffles Group. In addition, significant increases in the price of oil and gas could result in lower worldwide consumption and thus, a decline in demand for the offshore marine facilities, which could also materially and adversely affect the Business of the CIMC Raffles Group. 15

21 RISK FACTORS Worldwide demand and pricing in the offshore marine facilities industry are highly dependent upon global economic conditions The offshore marine facilities industry is cyclical in nature and is also sensitive to the cyclical nature of the industries it serves, such as oil, gas and shipping. The demand for, and pricing of, the CIMC Raffles Group s offshore marine facilities are sensitive to global and regional economic conditions as well as global and regional changes in demand in the offshore marine facilities industry. Continued growth in the world economy leading to increased demand for oil and gas is required to sustain a continued demand for new offshore marine facilities. In this regard, the global economic downturn in 2008/2009, coupled with a corresponding drop in the demand for oil, led to a decrease in capital expenditure in the offshore marine facilities industry in the year or so after the commencement of the global economic downturn, and resulted in a general fall in demand for and the price of offshore marine facilities. Further, due to the disruption in the global capital and credit markets during that time, it became difficult for offshore marine facility owners to secure financing and this had generally adversely affected new orders for offshore marine facilities and also led to some existing orders being cancelled. Although the global economy was showing nascent signs of recovery in the aftermath of the 2008/2009 global economic downturn, the situation appears to have taken a turn for the worse recently. The recent debt ceiling crisis, lowering of the long-term sovereign credit rating on the US by Standard & Poor s and weak economic growth in the US, and the potentially widening sovereign debt crisis in Europe, have stoked fears of an impending global economic recession. If a global economic recession were to materialise, the Business of the CIMC Raffles Group may be materially and adversely affected. The CIMC Raffles Group has substantial amounts of borrowings and may not be able to meet its payment obligations The CIMC Raffles Group has and may continue to have a substantial amount of borrowings. As noted in the results of the CIMC Raffles Group for FY2010, the external borrowings of the CIMC Raffles Group have increased approximately 45.0% from approximately US$633.1 million as at 31 December 2009 to approximately US$923.8 million as at 31 December 2010, and to approximately US$ million as at 30 June As a result, the gearing ratio of the CIMC Raffles Group (which is the ratio of net borrowings to equity) also increased from approximately 1.18 as at 31 December 2009 to approximately 2.22 as at 31 December 2010 and 3.46 as at 30 June The CIMC Raffles Group has historically serviced its obligations under its borrowings through cash generated from its operations and refinancing secured from banks and financial institutions. However, there can be no assurance that its cash flow will be sufficient to meet its payment obligations under its outstanding borrowings, or that it will be able to secure refinancing, in the future. The CIMC Raffles Group may also be required to dedicate a substantial portion of its cash flow from operations to making payments on its borrowings, thereby reducing the availability of cash for other corporate purposes. The occurrence of any of these events may materially and adversely affect the Business of the CIMC Raffles Group. The continuing operation and expansion of the CIMC Raffles Group are dependent upon the availability of financing The CIMC Raffles Group operates in a capital intensive industry. The construction of an offshore marine facility typically spans over a period of 18 to 50 months and requires significant resources, including funds. While the requirement for funds is partly met by progress payments from customers based on contractually agreed milestones, depending on the extent to which the progress payments match the requirement for funds and whether it is able to manage its working capital efficiently, the CIMC Raffles Group may still require a substantial amount of funds to meet any shortfall during the construction period. The CIMC Raffles Group presently sources its funds primarily through a combination of internal cash and external debt financing. Its growth strategy and the further expansion of its business will require significant additional investments and capital. As such, the CIMC Raffles Group is dependent upon and limited by its ability to secure additional financing, on commercially favourable terms or at all. 16