Ernst & Young Corporate Finance Pte Ltd (Incorporated in the Republic of Singapore) Company Registration Number: E

Transcription

1 CIRCULAR DATED 9 April 2013 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY If you are in any doubt about the contents of this Circular or the action you should take, you should consult your bank manager, stockbroker, solicitor, accountant or other professional adviser immediately. If you have sold or transferred all your shares in the capital of Samudera Shipping Line Ltd (the Company ), you should forward this Circular, the Notice of Extraordinary General Meeting and the attached Proxy Form immediately 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. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. SAMUDERA SHIPPING LINE LTD (Incorporated in the Republic of Singapore) Company Registration Number: C CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED NEW SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTION Independent Financial Adviser to the Independent Directors of Samudera Shipping Line Ltd Ernst & Young Corporate Finance Pte Ltd (Incorporated in the Republic of Singapore) Company Registration Number: E IMPORTANT DATES AND TIMES: Last date and time for lodgement of Proxy Form : 22 April 2013 at 10:30 a.m. Date and time of Extraordinary General Meeting : 24 April 2013 at 10:30 a.m (or immediately after the conclusion or adjournment of the Annual General Meeting of the Company to be held at a.m. on the same day and at the same venue) Place of Extraordinary General Meeting : Oasia Hotel, Courtyard 02 & 03, Basement 1, 8 Sinaran Drive, Singapore

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3 CONTENTS PAGE 1. Introduction The Proposed Adoption Of The New Shareholders Mandate For Interested Person Transactions Directors And Substantial Shareholders Interests In Shares Directors And Controlling Shareholders Interests In The Interested Person Transaction Directors Recommendation Extraordinary General Meeting Action To Be Taken By Shareholders Directors Responsibility Consent Documents Available For Inspection... 9 Appendix 1 Letter FROM IFA Appendix 2 General Information Relating To Chapter 9 Of The Listing Manual Appendix 3 DIAGRAM OF TANGGUH GROUP STRUCTURE... 19

4 DEFINITIONS In this Circular, the following definitions apply throughout unless the context otherwise requires or otherwise stated:- Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time. AGM : Annual General Meeting of the Company. Audit Committee : The audit committee of the Company. Board : The Board of Directors of the Company. CDP or Depository : The Central Depository (Pte) Limited. Circular : This circular to Shareholders dated 9 April Directors : The directors of SSL as at the Latest Practicable Date. EGM : The extraordinary general meeting of the Company to be held on 24 April 2013 at 10:30 a.m. (or immediately after the conclusion or adjournment of the AGM of the Company to be held at a.m. on the same day and at the same venue) at Oasia Hotel, Courtyard 02 & 03, Basement 1, 8 Sinaran Drive, Singapore Group : SSL, its subsidiaries and associated companies. IFA : The independent financial adviser, Ernst & Young Corporate Finance Pte Ltd, appointed by the Independent Directors to advise them in relation to the IPT Mandate. Independent Directors : Independent directors of the Company. Interested Persons : Means the Tangguh Group (which includes but are not limited to PT Silkargo Line) and as set out further in paragraph 2.2 of this Circular. Interested Person Transactions : Has the meaning ascribed to it in paragraph 2.3 of this Circular. IPT Mandate : Has the meaning ascribed to it in paragraph 1 of this Circular. Latest Practicable Date : 19 March 2013 being the latest practicable date prior to the printing of this Circular. Listing Manual : The SGX-ST Listing Manual, as amended or modified from time to time. NTA : Net tangible assets. NBU : PT Ngrumat Bondo Utomo. PT Silkargo Line : PT Silkargo Line, a subsidiary of Tangguh. PTSI : PT Samudera Indonesia Tbk, the immediate holding company of the Company. PTSI Group : PTSI, its subsidiaries and associated companies (excluding the Group). PTSSS : PT Samudera Shipping Services, a subsidiary of SSL. SGX-ST : Singapore Exchange Securities Trading Limited. 1

5 Shareholders : Registered holders of Shares except that where the registered holder is CDP, the term Shareholders shall, in relation to such Shares and where the context admits, mean the depositors whose securities accounts are credited with Shares. Shares : Ordinary shares in the capital of the Company. SSL or the Company : Samudera Shipping Line Ltd. Subsidiaries : Has the meaning ascribed to the term in the Act. Tangguh : PT Samudera Indonesia Tangguh. Tangguh Group : Tangguh, its subsidiaries and associated companies (excluding the PTSI Group and the Group). USD : United State of America Dollars. S$ and cents : Singapore dollars and cents. % : Per centum. The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Act. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa, and words importing persons shall include corporations. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in this Circular shall have the same meaning assigned to it under the said Act or any modification thereof, as the case may be, unless the context otherwise requires. Any reference to a time of day in this Circular shall be a reference to Singapore time. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular. Unless otherwise stated, the average exchange rate between USD and S$ for financial year 2012 was USD1.00: S$1.25. This exchange rate should not be construed as a representation that the USD amounts would have been, or could be, converted into S$ at the rate stated, or at all and vice versa. 2

6 SAMUDERA SHIPPING LINE LTD (Incorporated in the Republic of Singapore) Company Registration Number: C Directors:- Masli Mulia (Chairman) David Batubara (Executive Director and Chief Executive Officer) Asmari Herry Prayitno (Executive Director and Chief Operating Officer) Anwarsyah (Executive Director and Chief Financial Officer) Hermawan Fridiana Herman (Executive Director) Lim Kee Hee (Executive Director) Chng Hee Kok (Non-Executive and Independent Director) David Lim Teck Leong (Non-Executive and Independent Director) Lee Chee Yeng (Non-Executive and Independent Director) Nicholas Peter Ballas (Non-Executive and Independent Director) Registered Office:- 6 Raffles Quay #25-01 Singapore April 2013 To: The Shareholders of Samudera Shipping Line Ltd Dear Sir/Madam 1. INTRODUCTION The Directors are convening an EGM of the Company to be held on 24 April 2013 to seek Shareholders approval for the proposed adoption of a new shareholders mandate pursuant to Chapter 9 of the Listing Manual in relation to Interested Person Transaction ( IPT Mandate ). The purpose of this Circular is to provide Shareholders with information relating to and explaining the rationale of the proposed IPT Mandate. Particulars of the proposed IPT Mandate are set out in paragraph 2 of this Circular. Shareholders should read this Circular and the letter from IFA in Appendix 1 carefully and consider the recommendation of the Directors in paragraph 5 and the advice of the IFA to the Independent Directors in Appendix 1 in respect of the proposed IPT Mandate. If you are in any doubt about the proposed IPT Mandate, you should consult your stockbroker, bank manager, solicitor or other professional adviser immediately. 2. THE PROPOSED ADOPTION OF THE NEW SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS 2.1 Chapter 9 of the Listing Manual Under Chapter 9 of the Listing Manual, where an issuer or any of its subsidiaries (other than subsidiaries that are listed on the SGX-ST or an approved exchange) or associated companies (other than an associated company that is listed on the SGX-ST or on an approved exchange, provided that the listed group, or the listed group and its interested person(s), has control over the associated company) proposed to enter into a transaction with the issuer s interested persons, shareholders approval and/or an immediate announcement is required in respect of the transaction if the value of the transaction is equal to or exceeds certain financial materiality thresholds. However, an issuer may seek a shareholders mandate for recurrent transactions of a revenue or trading nature or those necessary for its day-to-day operations which may be carried out with the listed company s interested person but not for the purchase or sale of assets, undertakings or businesses. Transactions conducted under such a shareholders mandate are subject to the disclosure requirements in Rule 920 of the Listing Manual but are not separately subject to the financial materiality thresholds. General information pertaining to Chapter 9 of the Listing Manual, including the said financial materiality thresholds and the meanings of certain terms, is summarised in Appendix 2 to this Circular. 3

7 2.2 Class of Interested Person Tangguh Group The class of interested person which is covered by the proposed IPT Mandate is the Tangguh Group including but not limited to PT Silkargo Line. The interested person transaction which is covered by the proposed IPT Mandate consists of transaction(s) for the chartering of vessel(s) from the Tangguh Group which includes PT Silkargo Line. The shareholding structure in PT Silkargo Line consists of Tangguh (91.09%) and PT Silkargo Indonesia (8.91%). Tangguh is a controlling shareholder of SSL as Tangguh holds approximately 57.98% of the issued shares of PTSI as at the Latest Practicable Date. PTSI holds approximately 65.27% of the total issued share capital of the Company as at the Latest Practicable Date. PT Silkargo Indonesia is a subsidiary of PTSI. PTSI holds % shareholding interests in PT Silkargo Indonesia. A diagram showing the Tangguh Group structure is set out in Appendix 3 of this Circular. Transactions with interested persons which do not fall within the ambit of the proposed IPT Mandate shall be subject to the relevant provisions of Chapter 9 of the Listing Manual of the SGX-ST. 2.3 Categories of Interested Person Transactions The categories of interested person transactions that will be covered by the proposed IPT Mandate involve chartering of vessel(s) by the Group from Tangguh Group including but not limited to PT Silkargo Line ( Interested Person Transaction ). In particular, PTSSS intends to enter into a 3 year (with the option to renew for 2 consecutive one year period) time charterparty agreement with PT Silkargo Line for the time chartering of the vessel SINAR MATARAM ( Time Charterparty Agreement ). The Time Charterparty Agreement is subject to yearly review by both parties. The Company will undertake the review procedures as stated in paragraph 2.5 below before determining the continuation of the Time Charterparty Agreement. In the event the Time Charterparty Agreement is not on normal commercial terms and/or will be prejudicial to the interests of the Company and its minority Shareholders, the Company will not continue with the Time Charterparty Agreement. For avoidance of doubt, the proposed IPT Mandate will not include the purchase or sale of assets, undertakings or businesses. The proposed IPT mandate will be subject to the disclosure requirements in Rule 920 of the Listing Manual, but will not be separately subject to the financial materiality thresholds. 2.4 Rationale for and benefits of the proposed IPT Mandate The Group has long term business relationship with its customers for the transportation of liquid caustic soda between ports in Indonesia. The Group has been servicing its customers with small-sized Indonesian flagged chemical tankers. In view of the growing capacity requirement of customers and in order to achieve cost efficiency, the Group has been contemplating servicing its customers with vessel(s) of larger capacity than the existing vessels. This will also enable the Group to free up its existing capacity to service other customers. Indonesian cabotage rules require domestic sea transportation of all goods and persons to be carried out by Indonesian flagged vessels owned by Indonesian companies, especially for liquid chemical cargoes. This restricts the pool of vessels that the Group could charter to service its customers in Indonesia. Further and in addition to the Indonesian cabotage rules, the Group s selection of available vessel is further restricted by the specification and size of the vessel required by the Group to service its customers. PT Silkargo Line currently owns tanker vessel which is capable of carrying about 3,600 metric tonnes of liquid caustic soda per voyage. PT Silkargo Line has indicated its willingness to time charter its tanker vessel to the Group. 4

8 The proposed IPT Mandate and its renewal on an annual basis will eliminate the need for the Company to convene separate general meetings on each occasion to seek Shareholders approval as and when potential transactions within the scope of the proposed IPT Mandate with the specified Interested Person arise, thereby avoiding the loss of business opportunities and reducing substantially, the administrative time, inconvenience and expenses associated with the convening of such meetings on an ad hoc basis. 2.5 Guidelines and review procedures for Interested Person Transaction under the proposed IPT Mandate Guidelines For the Indonesian shipping market, due to the Indonesian cabotage rule, it is not common for owner of Indonesian flagged vessel to charter out Indonesian flagged vessel. Arising from the above, the Company faces considerable difficulties in obtaining charter rates quotation for vessels of such specifications and performance required by the Company. Nevertheless, to ensure that the Interested Person Transactions are carried out at arm s length on normal commercial terms and will not be prejudicial to the interests of the Company and the minority Shareholders, the Company will endeavour to obtain at least one (1) quote from independent shipbrokers or other ship owners for vessels which are of similar specifications and age to the vessel proposed to be chartered from the Tangguh Group before entering into or renewing a time charter agreement. If such quotes from independent shipbrokers or other ship owners are not available, the management of the Company will conduct a comparison between the charter rates for the particular vessel in issue against charter rates for similar vessels operated by the Group. In the event quotes from independent shipbrokers or other ship owners are not available and the Group does not operate similar vessels, the management of the Company (the Company will designate any one of its executive directors at that material time to be responsible for these actions) will: (a) In respect of tanker vessel, ensure that the gross revenue that the Group is likely to earn from the vessel exceeds the charter rates that the Group is paying to the Tangguh Group for the time chartering (charter-in) of the vessel ( Charter Rates ). The Company will first compare the gross revenue that the Company will receive against the Charter Rates, being the revenue margin. If the revenue margin is acceptable to the Company, the Company will then analyse the components of the Charter Rates which consist of (i) the ownership costs of the vessel; and (ii) the profit margin that can be expected for the charter-out of such a vessel. From the above, the Company will be able to determine whether the Charter Rates is reasonable. (b) In respect of container vessel, use a cost plus margin or revenue minus costs approach to determine the charter hire rates which will be based on industry knowledge and negotiations with the Tangguh Group. In determining whether the margin is reasonable, the management will form its commercial view on the potential revenue that the Group will make from chartering of a particular vessel. The Audit Committee will take into account the commercial view of the management to determine whether the margin is reasonable. In the event the above cannot be achieved, the management of the Company will determine whether the charter hire fees payable by the Group to Tangguh Group are on normal commercial terms based on the management s industry knowledge and experience and their understanding of the general industry practice. In order to afford maximum commercial flexibility and to avoid the loss of business opportunities, there is no approval or authority limit under the proposed IPT Mandate. With their findings (with or without the quote from independent shipbrokers or other ship owners as stated above (as applicable)), management will submit a report with the relevant supporting documents to the Audit Committee for the Audit Committee s consideration. The Audit Committee will then authorise the continuation of the Interested Person Transaction and/or changes to existing transactions and/or the entering into of new transactions if the Audit Committee is satisfied that 5

9 the transactions are on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. In the event that there are material variations from a transaction as set out in this Circular, the Audit Committee has the discretion to recommend to the Board to convene a Shareholders meeting to approve the change or the new terms (as the case may be) before the same is implemented. Further to the above, whenever the Audit Committee is required to authorise the continuation of the Interested Person Transaction and/or changes to existing transactions and/or the entering into of new transactions, the Audit Committee together with the management will also conduct reviews to ensure that the procedures have been adhered to and if at any time the Audit Committee is of the view that the review procedures have become insufficient or inappropriate, the Audit Committee will take such action as it deems appropriate and/or institute additional procedures as necessary to ensure that future transactions of a similar nature are on normal commercial terms and will not be prejudicial to the Company and its minority Shareholders. If at any time the Audit Committee is of the view that the review procedures are insufficient, inappropriate or are unable to ensure that the transactions will be on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders, the Company will revert to Shareholders to seek a fresh mandate. Abstention from participation in review process If a member of the Board has an interest in an Interested Person Transaction, whether directly or indirectly, he shall abstain from participating in the Company s internal review and approval process in relation to that Interested Person Transaction. Register and internal audit plan The Company will maintain a register of all interested person transactions including but not limited to the Interested Person Transactions carried out with Interested Persons (recording the basis, including the quotations obtained to support such basis, on which they are entered into) pursuant to the proposed IPT Mandate. The Company s annual audit plan will also incorporate a review of such Interested Person Transactions entered into in the relevant financial year and report the results to Audit Committee. The Audit Committee will review these Interested Person Transactions on a quarterly basis. Other than the above, there will also be periodic reporting to the Audit Committee as and when the Company enters into/ renew an Interested Person Transaction. 2.6 Disclosure in Annual Report and Financial Results In accordance with Chapter 9 of the Listing Manual, the Company will: (a) (b) Disclose the proposed IPT Mandate in its annual report, giving details of the aggregate value of transactions conducted pursuant to the proposed IPT Mandate during the financial year; and Announce the aggregate value of transactions conducted pursuant to the proposed IPT Mandate for the relevant financial periods which it is required to report on (pursuant to Rule 705 of the Listing Manual) within the time required for the announcement of such report. The disclosure will set out the name of the interested person and the corresponding aggregate value of the interested person transactions, presented to indicate the aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under the proposed IPT Mandate) and the aggregate value of all interested person transactions conducted under the proposed IPT Mandate (excluding transaction less than S$100,000). 2.7 Validity period of the proposed IPT Mandate The proposed IPT Mandate will take effect from the date of the passing of the ordinary resolution relating thereto to be proposed at the EGM and will continue in force until the next AGM of the Company unless revoked by Shareholders. Where relevant, approval from Shareholders will be sought for the subsequent renewal of the proposed IPT Mandate, subject to satisfactory review by the Audit Committee of its continued application to the Interested Person Transactions. 6

10 2.8 IFA s Opinion Pursuant to Chapter 9 of the Listing Manual, Ernst & Young Corporate Finance Pte Ltd has been appointed as the independent financial adviser to the Independent Directors to render an opinion on whether the guidelines and review procedures for determining the transaction prices of the Interested Person Transaction for the purposes of the proposed IPT Mandate, as set out in paragraph 2.5 of this Circular, are sufficient to ensure that the Interested Person Transaction will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. The IFA is of the opinion that the current guidelines and review procedures for determining the transaction prices of the Interested Person Transaction as set out in paragraph 2.5 of this Circular, if adhered to, are sufficient to ensure that the Interested Person Transaction will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. A copy of their letter to the Independent Directors dated 9 April 2013 is reproduced in Appendix 1 to this Circular. 2.9 Statement from the Audit Committee The Audit Committee comprising Independent Directors Messrs Chng Hee Kok, David Lim Teck Leong, Lee Chee Yeng and Nicholas Peter Ballas has reviewed the terms of the proposed IPT Mandate and is satisfied that the review procedures referred to in paragraph 2.5 of this Circular if adhered to, are sufficient to ensure that the Interested Person Transactions are carried out on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. However, should the Audit Committee subsequently find that the existing methods and/or procedures set out in paragraph 2.5 require material changes and/or becomes inappropriate, the Company will obtain a fresh mandate from the Shareholders at a Shareholders meeting. 3. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS IN SHARES As at the Latest Practicable Date, the interests of Directors and substantial Shareholders of the Company in Shares, as set out in the Company s register of interests of Directors and register of substantial Shareholders respectively, are as follows: Directors Direct % Deemed % Masli Mulia David Batubara Asmari Herry Prayitno 60,000 n.m. - - Anwarsyah 12,000 n.m. - - Hermawan Fridiana Herman Lim Kee Hee Chng Hee Kok David Lim Teck Leong ,000 n.m Lee Chee Yeng Nicholas Peter Ballas Substantial Shareholders PTSI 351,180, Tangguh ,180, NBU ,180, Note: (1) For the avoidance of doubt, the shareholding structure of NBU is fragmented and the shareholders of NBU are not deemed to have an interest in the 351,180,000 Shares (representing 65.27% of the total issued share capital of the Company)pursuant to Section 7 of the Act. 7

11 4. DIRECTORS AND CONTROLLING SHAREHOLDERS INTERESTS IN THE INTERESTED PERSON TRANSACTION As at the Latest Practicable Date: (a) Directors Interests Masli Mulia is a President Commissioner of PT Silkargo Indonesia, Tangguh and PT Perusahan Pelayaran Nusantara Panurjwan. Asmari Herry Prayitno is a President Director of PT Silkargo Line. Anwarsyah is a Commissioner of PT Silkargo Indonesia. (b) Controlling Shareholders Interests Tangguh is an Interested Person and a controlling shareholder of SSL as Tangguh holds approximately 57.98% of the issued shares of PTSI as at the Latest Practicable Date. PTSI holds approximately 65.27% of the total issued share capital of the Company. Save as set out in paragraphs 3 and 4 of this Circular, none of the Directors and controlling shareholders of the Company and any of their associates have any interest in the Interested Person Transactions set out above. The Interested Persons will abstain and have undertaken to ensure that their associates will abstain from voting on the resolution approving the proposed IPT Mandate. Masli Mulia, Asmari Herry Prayitno and Anwarsyah and controlling shareholders of the Company and any of their associates who are required to abstain from voting in respect of the proposed IPT Mandate shall decline to accept appointment as proxies for Shareholders to vote on the resolution in respect of the proposed IPT Mandate unless the Shareholder concerned shall have given specific instructions in his proxy form as to the manner in which his votes are to be cast in respect of the resolution. 5. DIRECTORS RECOMMENDATION For the reasons set out in paragraph 2.4 and taking into account the opinion of the IFA set out in paragraph 2.8, other than Masli Mulia, Asmari Herry Prayitno and Anwarsyah, the remaining Directors of the Company are of the opinion that the proposed IPT Mandate is in the best interests of the Company and accordingly recommend that Shareholders vote in favour of the resolution relating to the proposed IPT Mandate to be proposed at the EGM. 6. EXTRAORDINARY GENERAL MEETING An EGM will be held on 24 April 2013 at 10:30 a.m. (or immediately after the conclusion or adjournment of the AGM of the Company to be held at a.m. on the same day and at the same venue) at Oasia Hotel, Courtyard 02 & 03, Basement 1, 8 Sinaran Drive, Singapore for the purpose of considering and if thought fit, passing with or without amendment, the resolutions set out in the notice of EGM. 7. ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who are unable to attend the EGM and wish to appoint a proxy to attend and vote on their behalf should complete, sign and return the Proxy Form attached to the notice of EGM in accordance with the instructions printed thereon as soon as possible and in any event so as to arrive at the registered office of the Company at 6 Raffles Quay # Singapore not later than 48 hours before the time fixed for the EGM. The appointment of proxy by a Shareholder does not preclude him from attending and voting in person at the EGM if he wishes to do so. A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and to speak and vote thereat unless his name appears in the Depository Register maintained by CDP pursuant to the Act, 48 hours before the EGM. 8

12 8. DIRECTORS RESPONSIBILITY The Directors collectively and individually accept full responsibility for the accuracy of the information given in this Circular and confirm after making all reasonable enquiries that, to the best of their knowledge and belief, this Circular constitutes full and true disclosure of all material facts about the proposed IPT Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Circular misleading. Where information in this Circular has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Circular in its proper form and context. 9. CONSENT The IFA has given and has not withdrawn its written consent to the issuance of this Circular with the inclusion of its name, its letter to the Independent Directors dated 9 April 2013 and all references thereto, in the form and context in which they appear in this Circular. 10. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents are available for inspection at the Company s registered office at 6 Raffles Quay #25-01, Singapore during normal business hours from the date of this Circular up to and including the date of the EGM: (a) Memorandum and Articles of Association; (b) The audited accounts of the Company for the financial year ended 31 December 2012; (c) (d) The letter from the IFA to the Independent Directors dated 9 April 2013; and The proposed Time Charterparty Agreement. Yours faithfully for and on behalf of the Board of Directors of Samudera Shipping Line Ltd Hermawan Fridiana Herman Executive Director 9

13 APPENDIX 1 LETTER FROM IFA 9 April 2013 The Independent Directors of Samudera Shipping Line Ltd 6 Raffles Quay #25-01 Singapore Dear Sirs THE PROPOSED NEW SHAREHOLDERS MANDATE FOR INTERESTED PERSON TRANSACTIONS 1 INTRODUCTION Samudera Shipping Line Ltd (the Company ) is seeking shareholders approval for the adoption of a new shareholders mandate pursuant to Chapter 9 of the Listing Manual in relation to the Interested Person Transactions (the IPT Mandate ). This letter has been prepared for the use of the directors of the Company who are considered independent for the purposes of the proposed adoption of the IPT Mandate (the Independent Directors ) and is to be incorporated into the Circular to shareholders of the Company (the Shareholders ) dated 9 April 2013 (the Circular ) which provides, inter alia, the details of the IPT Mandate and the recommendation of the Independent Directors thereon. Unless otherwise defined, all terms in the Circular have the same meaning in this letter. To comply with the requirements of Chapter 9 of the Listing Manual, Ernst & Young Corporate Finance Pte Ltd ( EYCF ) has been appointed as the independent financial adviser to provide an opinion on whether the review procedures for determining the transaction prices of the Interested Person Transactions, as set out in the IPT Mandate as described in the section of the Circular entitled The Proposed Adoption of the New Shareholders Mandate for Interested Person Transactions, are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and the minority shareholders of the Company (the Minority Shareholders ). 2 TERMS OF REFERENCE The objective of this letter is to provide an independent opinion, for the purposes of Chapter 9 of the Listing Manual, on whether the review procedures set out in the IPT Mandate for determining the transaction prices of the Interested Person Transactions are sufficient to ensure that the transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and the Minority Shareholders. EYCF s views as set forth in this letter are based on the prevailing market and economic conditions, and our analysis of the information provided in the Circular as well as information provided to us by the Company, its subsidiaries and associated companies (the Group ), as of the Latest Practicable Date. Accordingly, this opinion shall not take into account any event or condition which occurs after the Latest Practicable Date. 10

14 EYCF is not and was not involved in any aspect of the discussions on the scope of the IPT Mandate, nor were we involved in the deliberations leading up to the decision by the Directors to obtain the IPT Mandate or the review procedures adopted by the Company for determining the transaction prices of the Interested Person Transactions. In the course of our evaluation of the review procedures proposed in connection with the IPT Mandate, we have held discussions with the management of the Company. We have not independently verified information furnished by the Directors and management of the Company or any representation or assurance made by them, whether written or verbal, and accordingly cannot and do not warrant or accept responsibility for the accuracy or completeness of such information, representation or assurance. Nevertheless, the Directors have confirmed to us that to the best of their knowledge and belief, the information provided to us (whether written or verbal) as well as the information contained in the Circular constitutes a full and true disclosure, in all material respects, of all material facts relating to the IPT Mandate and there is no material information the omission of which would make any of the information contained herein or in the Circular inaccurate, incomplete or misleading in any material respect. We have also made reasonable enquiries and used our judgement in assessing such information and have found no reason to doubt the reliability of such information. We have further assumed that all statements of fact, belief, opinion and intention made by the Directors in the Circular have been reasonably made after due and careful enquiry. We have not conducted a comprehensive review of the business, operations and financial condition of the Company or the transactions described on the Circular. Our opinion is addressed to the Independent Directors for their benefit and deliberation on the IPT Mandate. The recommendations made to the Shareholders in relation to the IPT Mandate shall remain the responsibility of the Independent Directors. In preparing this letter, we have not had regard to the specific investment objectives, financial situation, tax position or unique needs and constraints of any Shareholder. As different Shareholders would have different investment objectives, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his Shares should consult his stockbroker, bank manager, solicitor, accountant or other professional advisers. 3 EVALUATION OF THE PROPOSED REVIEW PROCEDURES FOR INTERESTED PERSON TRANSACTIONS 3.1 Rationale for and benefits of the IPT Mandate We reproduce below the rationale for, and the benefits of adopting, the IPT Mandate, as set out in Section 2.4 of the Circular: The Group has long term business relationship with its customers for the transportation of liquid caustic soda between ports in Indonesia. The Group has been servicing its customers with small-sized Indonesian flagged chemical tankers. In view of the growing capacity requirement of customers and in order to achieve cost efficiency, the Group has been contemplating servicing its customers with vessel(s) of larger capacity than the existing vessels. This will also enable the Group to free up its existing capacity to service other customers. Indonesian cabotage rules require domestic sea transportation of all goods and persons to be carried out by Indonesian flagged vessels owned by Indonesian companies, especially for liquid chemical cargoes. This restricts the pool of vessels that the Group could charter to service its customers in Indonesia. Further and in addition to the Indonesian cabotage rules, the Group s selection of available vessel is further restricted by the specification and size of the vessel required by the Group to service its customers. PT Silkargo Line currently owns tanker vessel which is capable of carrying about 3,600 metric tonnes of liquid caustic soda per voyage. PT Silkargo Line has indicated its willingness to time charter its tanker vessel to the Group. The IPT Mandate and its renewal on an annual basis will eliminate the need for the Company to convene separate general meetings on each occasion to seek Shareholders approval as and when potential transactions within the scope of the IPT Mandate with the specified Interested Person arise, 11

15 thereby avoiding the loss of business opportunities and reducing substantially, the administrative time, inconvenience and expenses associated with the convening of such meetings on an ad hoc basis. 3.2 Interested Person Transactions The class of Interested Person and categories of Interested Person Transactions which will be covered by the IPT Mandate are set out below: 2.1. Class of Interested Person The IPT Mandate will apply to PT Samudera Indonesia Tangguh ( Tangguh ), its subsidiaries and associated companies (excluding the Group and the PTSI Group, which is comprised of PT Samudera Indonesia Tbk ( PTSI ), its subsidiaries and associated companies (excluding the Group)) (the Tangguh Group ), including, but not limited to, PT Silkargo Line (the Interested Person ). PT Silkargo Line is owned by Tangguh (91.09%) and PT Silkargo Indonesia (8.91%). Tangguh is considered a controlling shareholder of the Company as it holds approximately 57.98% of the issued shares of PTSI as at the Latest Practicable Date. PTSI, in turn, holds approximately 65.27% of the total issued share capital of the Company as at the Latest Practicable Date and is the Company s immediate holding company. PT Silkargo Indonesia is a subsidiary of PTSI. PTSI holds % shareholding interests in PT Silkargo Indonesia. We note that transactions with interested persons which do not fall within the ambit of the proposed IPT Mandate shall be subject to the relevant provisions of Chapter 9 of the Listing Manual of the SGX-ST Categories of Interested Person Transactions The categories of transaction which will be covered by the proposed IPT Mandate involve the chartering of vessel(s) by the Group from the Tangguh Group including, but not limited to, PT Silkargo Line (the Interested Person Transactions ). In particular, PT Samudera Shipping Services ( PTSSS ), a subsidiary of the Company, intends to enter into a 3-year (with the option to renew for two (2) consecutive one-year periods) time charterparty agreement with PT Silkargo Line for the time chartering of the vessel SINAR MATARAM (the Time Charterparty Agreement ). The Time Charterparty Agreement is subject to yearly reviews by both parties. The Company will undertake the review procedures as stated in Section 2.5 of the Circular before determining the continuation of the Time Charterparty Agreement. In the event the Time Charterparty Agreement is not on normal commercial terms and/or will be prejudicial to the interests of the Company and the Minority Shareholders, the Company will not continue with the Time Charterparty Agreement. For avoidance of doubt, the proposed IPT Mandate will not include the purchase or sale of assets, undertakings or businesses. The proposed IPT mandate will be subject to the disclosure requirements in Rule 920 of the Listing Manual but will not be separately subject to the financial materiality thresholds. 3.3 Guidelines and Review Procedures for the Interested Person Transactions under the IPT Mandate The detailed text of the guidelines and review procedures for the Interested Person Transactions can be found Section 2.5 of the Circular. We note, inter alia, the following procedures established by the Group: 12

16 (a) Guidelines For the Indonesian shipping market, due to the Indonesian cabotage rule, it is not common for an owner of an Indonesian-flagged vessel to charter out its Indonesian-flagged vessel. Arising from the above, the Company faces considerable difficulties in obtaining charter rates quotation for vessels of such specifications and performance required by the Company. Nevertheless, to ensure that the Interested Person Transactions are carried out at arm s length on normal commercial terms and will not be prejudicial to the interests of the Company and the Minority Shareholders, the Company will endeavour to obtain at least one (1) quote from independent shipbrokers or other ship owners for vessels which are of similar specifications and age to the vessel proposed to be chartered from the Tangguh Group before entering into or renewing a time charter agreement. If such quotes from independent shipbrokers or other ship owners are not available, the management of the Company will conduct a comparison between the charter rates for the particular vessel in issue against charter rates for similar vessels operated by the Group. In the event quotes from independent shipbrokers or other ship owners are not available and the Group does not operate similar vessels, the management of the Company (the Company will designate any one of its executive directors at that material time to be reasonable for these actions) will: (a) in respect of tanker vessel, ensure that the gross revenue that the Group is likely to earn from the vessel exceeds the charter rates that the Group is paying to the Tangguh Group for the time chartering (charter-in) of the vessel (the Charter Rates ). The Company will first compare the gross revenue that the Company will receive against the Charter Rates, being the revenue margin. If the revenue margin is acceptable to the Company, the Company will then analyse the components of the Charter Rates which consist of (i) the ownership costs of the vessel; and (ii) the profit margin that can be expected for the charter-out of such a vessel. From the above, the Company will be able to determine whether the Charter Rates are reasonable. (b) in respect of container vessel, use a cost plus margin or revenue minus costs approach to determine the charter hire rates which will be based on industry knowledge and negotiations with the Tangguh Group. In determining whether the margin is reasonable, the management will form its commercial view on the potential revenue that the Group will make from chartering of a particular vessel. The Audit Committee will take into account the commercial view of the management to determine whether the margin is reasonable. In the event the above cannot be achieved, the management of the Company will determine whether the charter hire fees payable by the Group to the Tangguh Group are on normal commercial terms based on the management s industry knowledge and experience and their understanding of the general industry practice. In order to afford maximum commercial flexibility and to avoid the loss of business opportunities, there is no approval or authority limit under the proposed IPT Mandate. With their findings (with or without the quote from independent shipbrokers or other ship owners as stated above (as applicable)), the management of the Company will submit a report with the relevant supporting documents to the Audit Committee for the Audit Committee s consideration. The Audit Committee will then authorise the continuation of the Interested Person Transaction and/or changes to existing transactions and/or the entering into of new transactions if the Audit Committee is satisfied that the transactions are on normal commercial terms and will not be prejudicial to the interests of the Company and its minority Shareholders. In the event that there are material variations from a transaction as set out in this Circular, the Audit Committee has the discretion to recommend to the Board to convene a Shareholders 13

17 meeting to approve the change or the new terms (as the case may be) before the same is implemented. Further to the above, whenever the Audit Committee is required to authorise the continuation of the Interested Person Transaction and/or changes to existing transactions and/or the entering into of new transactions, the Audit Committee together with the management will also conduct reviews to ensure that the procedures have been adhered to and if at any time the Audit Committee is of the view that the review procedures have become insufficient or inappropriate, the Audit Committee will take such action as it deems appropriate and/or institute additional procedures as necessary to ensure that future transactions of a similar nature are on normal commercial terms and will not be prejudicial to the Company and its minority Shareholders. If, at any time, the Audit Committee is of the view that the review procedures are insufficient, inappropriate or are unable to ensure that the transactions will be on normal commercial terms and will not be prejudicial to the interests of the Company and the Minority Shareholders, the Company will revert to Shareholders to seek a fresh mandate. (b) Abstention from participation in review process If a member of the Board has an interest in an Interested Person Transaction, whether directly or indirectly, he shall abstain from participating in the Company s internal review and approval process in relation to that Interested Person Transaction. (c) Register and internal audit plan The Company will maintain a register of all interested person transactions including, but not limited to, the Interested Person Transactions carried out with the Interested Persons (recording the basis, including the quotations obtained to support such basis, on which they are entered into) pursuant to the proposed IPT Mandate. The Company s annual audit plan will also incorporate a review of such Interested Person Transactions entered into in the relevant financial year and report the results to Audit Committee. The Audit Committee will review these Interested Person Transactions on a quarterly basis. Other than the above, there will also be periodic reporting to the Audit Committee as and when the Company enters into/renew an Interested Person Transaction. 3.4 Disclosure in annual report and financial results In accordance with Chapter 9 of the Listing Manual, the Company will: (a) (b) disclose the proposed IPT Mandate in its annual report, giving details of the aggregate value of the transactions conducted pursuant to the proposed IPT Mandate during the financial year; and announce the aggregate value of transactions conducted pursuant to the proposed IPT Mandate for the relevant financial periods which it is required to report on (pursuant to Rule 705 of the Listing Manual) within the time required for the announcement of such report. The disclosure will set out the name of the interested person and the corresponding aggregate value of the interested person transactions, presented to indicate the aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under the proposed IPT Mandate) and the aggregate value of all interested person transactions conducted under the proposed IPT Mandate (excluding transactions less than $100,000). 3.5 Validity period of the IPT Mandate The proposed IPT Mandate will take effect from the date of the passing of the ordinary resolution relating thereto to be proposed at the EGM and will continue in force until the next AGM of the Company, unless revoked by Shareholders. Where relevant, approval from Shareholders will be sought for the subsequent renewal of the IPT Mandate, subject to satisfactory review by the audit committee of its continued application to the Interested Person Transactions. 14

18 4 CONCLUSION In arriving at our opinion on whether the guidelines and review procedures for determining the transaction prices of the Interested Person Transactions for purposes of the IPT Mandate, as set out in the section Guidelines and Review Procedures for Interested Person Transactions under the IPT Mandate of the Circular, are sufficient to ensure that the Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and the Minority Shareholders, we have considered the following: (a) (b) (c) the Directors rationale for, and the benefits accruing to, the Group arising from, the IPT Mandate; the class of Interested Person and categories of the Interested Person Transactions to be covered by the IPT Mandate; and the review procedures for the Interested Person Transactions. Based on the analysis undertaken and subject to the qualifications and assumptions made herein, EYCF is of the opinion that the current guidelines and review procedures for determining the transaction prices of the Interested Person Transactions, as set out in the section Guidelines and Review Procedures for Interested Person Transactions under the IPT Mandate of the Circular, if adhered to, are sufficient to ensure that the Interested Person Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests of the Company and the Minority Shareholders. We have prepared this letter for the use of the Independent Directors of the Company in connection with and for the purposes of their consideration of the IPT Mandate. A copy of the letter may be reproduced in the Circular. Whilst a copy of this letter may be reproduced in the Circular, no other person may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of EYCF in each specific case, except in relation to the IPT Mandate. This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Yours faithfully For and on behalf of Ernst & Young Corporate Finance Pte Ltd Luke Pais Managing Director Elisa Montano Director 15