JK TECH HOLDINGS LIMITED (Incorporated in the Republic of Singapore) (Company Registration No. 200310813H) PROPOSED PLACEMENT OF 150,000,000 ORDINARY SHARES IN THE CAPITAL OF JK TECH HOLDINGS LIMITED 1. INTRODUCTION TO THE PROPOSED PLACEMENT The Board of Directors (the Directors ) of JK Tech Holdings Limited (the Company, together with its subsidiaries, the Group ) wishes to announce that, the Company has, on 11 July 2014, entered into an underwritten placement agreement (the Agreement ) with DBS Bank Ltd. ( DBS ) and Maybank Kim Eng Securities Pte Ltd ( MBKE, and together with DBS, the Joint Agents ) pursuant to which the Company proposes to issue up to 150,000,000 new ordinary shares in the capital of the Company (the Shares ) at an issue price of S$0.40 per Share (the Price ), amounting to the aggregate amount of S$60 million (the Proposed ). 1.1. Shareholders Approval The Company intends to convene an extraordinary general meeting (the EGM ) to seek approval of the Shareholders for the Proposed. 2. INFORMATION ON THE PROPOSED PLACEMENT 2.1. of Shares Subject to the terms and conditions of the Agreement, the Company agrees to allot and issue, and the Joint Agents severally agree (and neither jointly nor on a joint and several basis) to use reasonable endeavors as agents for and on behalf of the Company to procure subscribers for, or place out, or failing which, to subscribe for, such proportions of the Shares at the Price for each Share: Number of Shares DBS 75,000,000 MBKE 75,000,000 Total: 150,000,000 The Price of S$0.40 is at a discount of 41.4% to the volume weighted average price ( VWAP ) of S$0.6821 of the Shares for trades done on the Singapore Exchange Securities Trading Limited ( SGX-ST ) on 8 July 2014, being the last full market day on which the Shares were traded prior to the date the Agreement was signed. 2.2. Conditions Precedent Completion of the Proposed shall be conditional upon, inter alia: (a) the submission of the additional listing confirmation by the Sponsor and the receipt of the listing and quotation notice from the SGX-ST for the listing and quotation of the 1
Shares on the SGX-ST, and not having been revoked or amended and where such approval is subject to conditions, such conditions being reasonably acceptable to the Joint Agents, and to the extent that any conditions to such approval are required to be fulfilled on or before the date of completion of the Proposed, they are so fulfilled to the satisfaction of the SGX-ST or waived by the SGX-ST; (b) (c) (d) (e) (f) the issue and subscription of the Shares not being prohibited by any statute, order, rule or regulation promulgated after the date of the Agreement and remaining in force as at the appointed date for the completion of the Proposed by any legislative, executive or regulatory body or authority of Singapore which is applicable to the Company; the Joint Agents being reasonably satisfied that the Shares will be admitted to the Official List of the SGX-ST without undue delay after the date of completion of the Proposed ; as of the date of completion of the Proposed, the trading of the issued Shares on the SGX-ST not being suspended by the SGX-ST (other than a suspension on a temporary basis requested by the Company) and the issued Shares not having been delisted from the SGX-ST; there having been, as at the date of completion of the Proposed, no occurrence of any event nor the discovery of any fact rendering untrue or incorrect in any respect any of the representations, warranties and undertakings contained in the Agreement if they were repeated on and as of the date of completion of the Proposed ; and where necessary, the Company having obtained specific approval from its Shareholders for the issue and allotment of the Shares at the EGM to be convened. If any of the conditions set out in the Agreement are not satisfied on or before 31 October 2014, the obligations of the Joint Agent and the Company under the Agreement shall ipso facto cease and determine thereafter and in that event the Company and the Joint Agents shall be released and discharged from their respective obligations under the Agreement without prejudice to antecedent breach of any of the obligations and liabilities hereunder. 2.3. Shares Pursuant to the allotment and issue of the Shares, the existing issued share capital of the Company (excluding treasury shares) will increase from 140,889,065 Shares to 290,889,065 Shares. The Shares represents approximately 106.5% and 51.6% of the existing and enlarged issued share capital (excluding treasury shares) of the Company respectively. The Shares shall be sold free from any and all mortgages, charges, claims, securities, pledges, liens, equities, encumbrances or any other interests whatsoever and shall rank in all respects pari passu with the Shares existing at the date of the issue of the Shares, save that they shall not rank for any entitlements, distributions, dividends or rights (if any), the record date in respect of which falls prior to the date of issue of the Shares. 2
The Shares will not be placed to any of the persons set out as restricted persons under Rule 812(1) of the SGX-ST Manual Section B: Rules of Catalist. The Company will be obtaining Shareholders approval for the Proposed. Please refer to section 5 of this announcement for more information. 3. RATIONALE OF THE PROPOSED PLACEMENT AND USE OF PROCEEDS The Company had obtained the approval of shareholders of the Company ( Shareholders ) at the extraordinary general meeting held on 22 May 2014 for the proposed diversification of the Company into the new business of exploration, exploitation and production of oil and gas (the New Business ) On 11 July 2014, the Company announced that it had entered into a sale and purchase agreement to acquire the entire issued and paid up share capital of Caracol Petroleum, LLC (the Proposed Acquisition ). The Company is undertaking the Proposed primarily to meet the Company s funding needs for the Proposed Acquisition and future projects in the New Business. The net cash proceeds from the Proposed (after deducting expenses relating to the Proposed s) will be approximately S$59.0 million (the Proceeds ), and will be used by the Company in the following estimated proportions: Use of Proceeds Percentage Allocation Proposed Acquisition 50% to 90% Funding of the New Business 0% to 40% General working capital of the Group 0% to 10% Pending the deployment for the uses identified above, the Proceeds may be deposited with banks and/or financial institutions or invested in money market instruments and/or marketable securities, or used for any other purpose on a short-term basis, as the Directors may in their absolute discretion deem fit. The Company will make periodic announcements on the use of the Proceeds as and when the Proceeds are materially disbursed, and provide a status report on the use of the Proceeds in the Company s annual report. The Company will disclose a breakdown with specific details on the use of Proceeds for working capital in such announcements and annual reports. Where there is any material deviation from the stated use of Proceeds, the Company will announce the reasons for such deviation. The Directors are of the opinion that after taking into consideration the present banking facilities, the working capital available to the Group is sufficient to meet its present requirements. The reason for the Proposed is to provide the Company with funds for the Proposed Acquisition and further strengthen the financial position of the Group. 3
4. FINANCIAL EFFECTS FOR THE PROPOSED PLACEMENT The proforma financial effects are presented for illustration purposes only and are not intended to reflect the actual future financial situation of the Company after the completion of the Proposed. Such proforma financial effects have been computed based on the audited consolidated financial statements of the Group for the financial year ended 31 March 2014 ( FY2014 ) and after taking into account the issuance of 74.96 million Shares since 31 March 2014. 4.1. Net Tangible Assets Assuming that the Proposed had been completed on 31 March 2014, the effect on the net tangible asset ( NTA ) per Share (as defined below) as at 31 March 2014 will be as follows: Before the Proposed After the Proposed NTA attributable to Shareholders of the Company (S$ 000) 14,420 73,420 Number of Shares ( 000) 140,889 290,889 NTA per Share attributable to Shareholders of the Company (cents) 10.24 25.24 4.2. Earnings per Share Assuming that the Proposed had been completed on 1 April 2013, the effect on the earnings per Share ( EPS ) for FY2014 will be as follows: Before the Proposed After the Proposed Net profit after tax attributable to Shareholders of the Company (S$ 000) 1,147 1,147 Weighted average number of Shares ( 000) 140,889 290,889 EPS (cents) 0.81 0.39 5. OTHER INFORMATION 5.1. Shareholders Approval for the Proposed The Shares exceed the number of ordinary shares in the capital of the Company ( Shares ) that can be placed out under the general mandate of the Company to allot and issue Shares obtained by the Company from the Shareholders at the annual general meeting of the Company held on 24 July 2013. In addition, the Price is more than 10% discount to the VWAP for trades done on the SGX-ST for the full market day on which the Agreement is signed. As such, the Company intends to convene the EGM to seek approval of the Shareholders for the Proposed. 4
5.2. Application to the Sponsor The Company will be making an application through its sponsor, PrimePartners Corporate Finance Pte. Ltd. (the Sponsor ) to the SGX-ST for the listing of and quotation for the Shares on the Catalist board of the SGX-ST. 5.3. Irrevocable Undertakings Mr. Ang Yew Jin Eugene, the Director and controlling shareholder of the Company, and Ezion Holdings Limited, the controlling shareholder of the Company, will undertake to vote in favour of the Proposed at the EGM. As at the date of this announcement, Mr. Ang Yew Jin Eugene and Ezion Holdings Limited have a total interest of approximately 67.87% in the Shares. 6. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the Agreement are available for inspection during normal business hours at the Company s registered office at 61 Kaki Bukit Avenue 1, #02-13 Shun Li Industrial Park, Singapore 417943 for a period of three (3) months from the date of this announcement. 7. FURTHER INFORMATION AND ACTION BY SHAREHOLDERS A circular containing information in connection with the Proposed will be despatched to the Shareholders in due course. The Company will make further announcements relating to the Proposed as and when necessary. As there is no assurance that the aforementioned transactions will be completed, Shareholders are advised to refrain from taking any action which may be prejudicial to their interests before seeking advice from their stockbrokers, bank managers, solicitors, accountants or other professional advisers (as appropriate). This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. 8. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS The interests of the Directors and substantial shareholders in the Shares, based on the registers of Directors interests in Shares and Substantial Shareholders interests in Shares, respectively, before and after the Completion of the Proposed are as follows: 5
Existing Share Capital After Proposed Number of Shares % (1) Number of Shares % (2) Directors Ang Yew Jin Eugene 53,617,539 38.06 53,617,539 18.43 Yong Boon Chuan Leslie - - - - Lim Yeok Hua - - - - Lee Sek Leong Christopher - - - - Tan Ser Ko - - - - Ravinder Singh Grewal s/o Sarbjit Singh - - - - Substantial Shareholders (other than Directors) Ezion Holdings Limited (3) 42,000,000 29.81 42,000,000 14.44 Ang Ai Nyuet 14,500,000 10.29 14,500,000 4.98 SF Ventures (3) 13,000,000 9.23 13,000,000 4.47 Notes: (1) Based on the current share capital of 140,889,065 Shares (excluding treasury shares) as at the date of this announcement. (2) Based on the enlarged share capital of 290,889,065 Shares (excluding treasury shares) after the completion of the Proposed. (3) As at the date of this announcement, Ezion Holdings Limited and SF Ventures hold 260,000,000 and 65,000,000 options, respectively, convertible into 260,000,000 and 65,000,000 Shares, respectively. None of the Directors or substantial shareholders of the Company has any interest, directly or indirectly, in the Proposed, other than in their respective capacity as Directors or Shareholders of the Company. BY ORDER OF THE BOARD JK Tech Holdings Limited Ang Yew Jin Eugene Managing Director 11 July 2014 6
This announcement has been prepared by the Company and its contents have been reviewed by the Company's sponsor, PrimePartners Corporate Finance Pte. Ltd. (the Sponsor ), for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (the SGX-ST ). The Sponsor has not independently verified the contents of this announcement. This announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement. The contact person for the Sponsor is Mr. Mark Liew, Managing Director, Corporate Finance, at 20 Cecil Street, #21-02 Equity Plaza, Singapore 049705, telephone (65) 6229 8088. 7