(Incorporated in the Republic of Singapore) Company Registration No. 200509967G This announcement has been prepared by the Company and reviewed by the Company s sponsor, CNP Compliance Pte. Ltd. ( Sponsor ), for compliance with the Singapore Exchange Securities Trading Limited ( SGX-ST ) Listing Manual Section B: Rules of Catalist. The Sponsor has not verified the contents of this announcement including the accuracy or completeness of any of the information disclosed or the correctness of any of the statements or opinions made or reports contained in this announcement. This announcement has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume no responsibility for the contents of this announcement including the correctness of any of the statements or opinions made in this announcement. The contact person for the Sponsor is Mr Thomas Lam at 36 Carpenter Street, Singapore 059915, telephone: (65) 6323 8383; email: tlam@cnplaw.com. ENTRY INTO OF A CONVERTIBLE LOAN NOTE AGREEMENT BY THE COMPANY FOR THE ISSUANCE OF UNSECURED CONVERTIBLE LOAN NOTES OF AN AGGREGATE PRINCIPAL AMOUNT OF S$3,750,000 The Board of Directors (the Board ) of Natural Cool Holdings Limited (the Company and together with its subsidiaries, the Group ) wishes to announce that the Company has on 22 January 2013 entered into a Convertible Loan Note Agreement (the CLN Agreement ) with HT Holdings (HK) Ltd (the Lender or the Subscriber ), pursuant to which the Lender has agreed to grant to the Company a loan in the principal amount of S$3,750,000 (the Loan ), convertible into new ordinary shares ( ) in the capital of the Company on the terms and subject to the conditions of the CLN Agreement. The Loan shall be granted by way of subscription for convertible notes ( Notes ), comprising ten notes, each Note carrying a principal face value of S$375,000. A. Background of the Lender Name Place of Incorporation Shareholders of the Lender Directors of the Lender Principal Business Reason for Investment HT Holdings (HK) Ltd BVI Omar Loebis: 50% Wong Keat : 50% Leon Omar Loebis Wong Leon Keat Investment holding vehicle Financial investor The Lender was referred by Joseph Ang Choon Cheng, a Director of the Company. No referral fees will be payable by the Company to Joseph Ang Choon Cheng. The shareholders of the Lender, namely Omar Loebis and Wong Leon Keat is not related to any of the Directors and Substantial Shareholders. Omar Loebis and Wong Leon Keat are directors and shareholders in WLA Regnum Advisory Services Pte Ltd ( WLA ), which provides internal audit services to the Company. WLA will resign as Internal 1
Auditor of the Company after completion of the CLN Agreement. The Lender has further in the CLN Agreement represented that it is not related to any of the Directors and Substantial Shareholders (as defined in Listing Manual Section B: Rules of Catalist (the Catalist Rules ) of the SGX-ST) and is not an entity falling within the categories set out in Rule 812(1) of the Catalist Rules. Save as set out above, the Lender has no other business relationship with the Group. As of the date of the CLN Agreement, there has not been any request from, or understanding between the Company and the Lender, that a representative of the Lender will be appointed a Director of the Company in connection with the Loan granted. B. Rationale for the issue of the Convertible Loan Notes to the Lender The Company intends, through the issuance of the Convertible Loan Notes to raise funds for investment purposes by the Company. The details of the investment will, when undertaken, be disclosed in a separate announcement. The Company has identified the Lender as having the interests to invest in the Company through subscribing for the Notes. The structure of the Loan and the Notes were negotiated between the Company and the Lender. C. Principal Terms of the CLN Agreement The principal terms of the CLN Agreement are set out below. (a) The Loan The principal amount of the Loan is S$3,750,000. The subscription of the Notes shall be made on the date as notified in writing by the Company to the Subscriber, being a date not earlier than 7 days, but not later than 14 days, that all the conditions precedent set out in paragraph C(b) are fulfilled ( Subscription Date ). The Notes is convertible into in the capital of the Company which are listed on the Catalist of the SGX-ST. (b) Conditions Precedent The Company s obligation to issue the Notes, and the Lender s obligation to subscribe for the Notes, are conditional upon fulfilment or waiver of the following conditions precedent:- (ii) (iii) the entry into of the Share Subscription Agreement ( Share Subscription Agreement ) by the Company in respect of the Subscription of shares in HMK Energy Pte Ltd and the conditions for the subscription of such shares as set forth in the Share Subscription Agreement having been met or waived; the receipt of the listing and quotation notice of the SGX-ST for the listing of the Conversion (as defined below) on the Catalist of the SGX-ST and the fulfilment or waiver of any conditions imposed by the SGX-ST under such notice, and such notice not having been withdrawn; any direction or requirements of the SGX-ST or the Sponsor, issued by the SGX- ST or the Sponsor at any time, to the issuance, allotment or listing of the Conversion to the Subscriber (or its nominee(s)) having been fulfilled; 2
(iv) (v) (vi) (vii) (viii) the approval of the Company s shareholders being obtained at an extraordinary general meeting if required; there being no suspension of trading other than pursuant to a very substantial acquisition or reverse takeover under Chapter 10 of the Catalist Rules, of the on the SGX-ST for a period of five consecutive business days or more; the provision of a certified extract of the Company s written resolutions of its Board of Directors approving and authorising the entry into of the Agreement, the issuance of the Notes and the performance of all obligations of the Company in relation thereto which include the issuance of the Notes, the issuance of the Conversion (upon conversion of the Notes); all representations, undertakings and warranties of the parties to the Agreement being and continuing to be complied with, true, accurate and correct up to Completion Date (as defined under the Agreement) as if made on each day up to the Completion Date; and All relevant government or regulatory approvals and waivers and other third party approvals and consents including without limitation that of the SGX-ST, where applicable and/or required, and any conditions imposed by the authorities in giving such approval having been fulfilled (or waived), for the issue of the Notes and the execution, delivery and performance of the Agreement. (c) Interest Rate The Notes shall bear interest from the respective dates on which they are issued at the rate of 5% simple interest, as calculated on an annual basis assuming a 365-day year, payable in cash at the last day of the 12 th and 24 th months following the issue of the Notes. The Notes shall cease to bear interest on conversion into, and the interest on Notes that have been converted shall be calculated up to, but exclusive of, the date of conversion. (d) Use of Proceeds The estimated net proceeds from the issuance of Notes, after deducting estimated expenses pertaining to the issuance of the Notes of approximately S$80,400 (which is approximately 2.14% of the gross proceeds), would be approximately S$3,669,600 (the Net Proceeds ). The Company will, pursuant to the Agreement, use the entire Net Proceeds towards the subscription of shares in HMK Energy Pte Ltd (the Investment ). Details of the Investment will be separately disclosed in the Company s later announcement. In the event that such Net Proceeds is not for any reason whatsoever fully applied towards the aforesaid Investment, the Company shall use the remaining Net Proceeds for working capital of the Company and its subsidiaries and/or such other purposes as the Company in its discretion deems fit. The Company will make periodic announcements on the utilisation of the Net Proceeds. The Directors are of the opinion that, after taking into consideration the present bank facilities, the working capital available to the Group is sufficient to meet its present requirements. Notwithstanding the foregoing, the issuance of the Notes will provide additional funds to allow the company to undertake investments and diversify the earnings stream of the Company. 3
The Directors are also of the opinion that, after taking into consideration the present bank facilities and Net Proceeds, the working capital available to the Group is sufficient to meet its present requirements. (e) Extension for the Repayment and Early Prepayment Unless otherwise agreed between the Company and the Lender, no extension of the Tenure (as defined below) for the repayment of the principal amount of the Loan will be allowed under the Agreement. Subject to the Company s right to purchase the Notes, as set out below, the Loan cannot in part or in whole be prepaid. (f) Rights of Redemption The Company and/or any of its Subsidiaries may at any time and from time to time, purchase Notes at any price as agreed between the Company (or such Subsidiary) and the Lender. Such Notes may, at the option of the Company and subject to the applicable laws, be held or cancelled. All Notes which are redeemed or converted will forthwith be cancelled by the Company and may not be reissued or resold. The Notes which are not purchased, converted or cancelled by the Company (as the case maybe) will be redeemed by the Company at 100% of their principal amount on the date falling two (2) years (the Tenure ) from the Subscription Date of the Notes (the "Maturity Date"). (g) Rights of Conversion The Lender shall have the right ( Conversion Right ) to convert all or any number of the Notes (but not part of any Note) into duly authorised, validly issued, fully-paid and unencumbered up to the entire amount of the Loan ( Conversion ), at the option of the Lender, at the price of 15 cents per Share ( Conversion Price ), at any time from and including the respective date on which the Notes were issued and registered in accordance with the Agreement up to the close of business on the last calendar day of the month one (1) month after the Maturity Date (the "Conversion Period"), following which the Conversion Right shall lapse. The Conversion Right shall not be detachable nor assignable separate from the corresponding Note. The volume weighted average price for trades done on the on the sponsor supervised board (the Catalist ) of SGX-ST on 18 January 2013 (being the last full market day immediately preceding the signing of the Agreement) was S$0.138. The Conversion Price represents a premium of 8.69% to such volume weighted average price. The Conversion Price is subject to adjustments in the manner set out in the Agreement in the event of any rights, bonus, distributions (other than declarations of dividends) or other capitalisation issue by the Company. The Conversion when issued will rank pari passu with the existing and be entitled to all rights accruing thereto, except that such Conversion shall not be entitled to any dividends, rights, allotments or other distributions, the record date of which is before the date of allotment and issue of the Conversion. (h) Number of Conversion On the basis of the Conversion Price of 15 cents per Share and assuming that the Conversion Rights are exercised in respect the entire principal amount of the Notes of S$3,750,000 held by the Lender, the number of Conversion to be subscribed by the Lender is as follows:- 4
Name of the Lender Number of Conversion issued As a percentage of the Group s issued share capital as at the date of this announcement Notes HT Holdings (HK) Ltd 25,000,000 12.17% 10.85% The Company confirms that: As a percentage of the Group s enlarged share capital after the Conversion Rights are exercised for the entire amount of S$3,750,000 (ii) (iii) the issue of Conversion will not transfer a controlling interest without prior approval of shareholders in general meeting; an announcement will be made for any adjustment to the exercise price of the Notes if any, pursuant to the terms thereof; and an announcement will be made at least one month prior to the expiration of the Notes. Governing law The Agreement is governed by and construed in accordance with Singapore law. D. Authority to Issue The Notes and the Conversion will be issued and allotted by the Company to the Lender pursuant to the general mandate granted by the Company s shareholders at the annual general meeting of the Company on 23 April 2012 (the AGM ), authorising the Directors to (a) allot and issue of the Company (whether by way of rights, bonus or otherwise); and/or (b) make or grant offers, agreements, or options that might or would require to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible or exchangeable into, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit not exceeding fifty per cent (50%) of the total issued excluding treasury shares of the total issued excluding treasury shares of the Company as at the date of AGM. As at the date of the AGM, the Company had an issued capital of 165,447,985 and an issued share capital of S$28,956,902. The maximum number of approved to be issued under the general mandate at the AGM is up to 82,723,992. As at the date of this announcement, 40,000,000 have been issued pursuant to the general mandate. Therefore, the available to be issued under the general mandate prior to this announcement is up to 42,723,992. E. Financial Effects The Company currently has an issued share capital of S$31,956,902 comprising 205,447,985. For illustration purpose only, the financial effects of the issuance exercise of the Conversion Rights into Conversion ( Conversion of ) are set out below:- (a) On the assumption that the entire principal amount of the Loan of S$3,750,000 is disbursed on 1 January 2011, the outstanding principal amount of the Loan outstanding 5
as at 31 December 2011 is S$3,750,000, none of the Loan are converted into Conversion as at 31 December 2011 and 5% interest is payable for 12 months period Share Capital As at 31 December 2011 No. of Paid-up Capital (S$) Issued Share capital as at 31 December 2011 165,447,985 28,956,902 Issued Share capital after the Conversion of 165,447,985 28,956,902 (ii) Net Tangible Assets ( NTA ) As at 31 December 2011 Before the Conversion of After the Conversion of NTA (S$) 31,622,293 31,434,793 No. of (excluding treasury shares) NTA per Share (cents) 165,447,985 165,447,985 19.11 19.00 (iii) Loss Per Share ( LPS ) For FY2011 (Loss) attributable to Shareholders (S$) Before the Conversion of After the Conversion of (3,473,868) (3,661,368) Weighted average number of (excluding treasury 152,714,346 152,714,346 shares) (1) LPS (cents) Notes: (2.27) (2.40) (1) For the period from 1 January 2011 up to 31 December 2011. (b) On the assumption that the entire principal amount of the Loan of S$3,750,000 is disbursed on 1 January 2011, that the entire amount of the Loan is converted into 25,000,000 Conversion on 31 December 2011 at the price of 15 cents per Conversion Share, and that there are no amount due on the Loan as at 31 December 2011 and 5% interest is payable for 12 months period Share Capital As at 31 December 2011 No. of Paid-up Capital (S$) Issued Share capital as at 31 December 2011 165,447,985 28,956,902 Issued Share capital after the Conversion of 190,447,985 32,706,902 6
(ii) NTA As at 31 December 2011 Before the Conversion of After the Conversion of NTA (S$) 31,622,293 35,184,793 No. of (excluding treasury shares) NTA per Share (cents) 165,447,985 190,447,985 19.11 18.47 (iii) LPS For FY2011 Before the Conversion of After the Conversion of (Loss) attributable to Shareholders (S$) (3,473,868) (3,661,368) Weighted average number of (excluding 152,714,346 152,782,839 treasury shares) (1) LPS (cents) (2.27) (2.40) F. Additional Listing and Quotation Application to the SGX-ST An application will be made to the SGX-ST via the Sponsor in due course for the listing and quotation of the Conversion to be issued upon conversion of the Loan from time to time within the Conversion Period. The Company will make the necessary announcements once the approval-in-principle for the listing and quotation of the Conversion has been obtained from the SGX-ST. G. Interests of Directors and Controlling Shareholders None of the Directors or Controlling shareholders of the Company have any direct or indirect interest in the Agreement, other than through their respective shareholdings in the Company. H. Rule 812 of the Catalist Rules The Conversion will not be placed to any of the persons set out under Rule 812(1) of the Catalist Rules and will be in compliance with Rule 812 of the Catalist Rules. I. Directors Responsibility Statement The Directors collectively and individually accept full responsibility for the accuracy of the information given in this announcement and confirm after making all reasonable enquiries, that to the best of their knowledge and belief, this announcement constitutes full and true disclosure of all material facts about the Agreement, and the Directors are not aware of any facts the omission of which would make any statement in this announcement misleading. 7
J. Document for Inspection Shareholders should note that a copy of the Agreement shall be available for inspection during normal business hours at the Company s registered office at 29 Tai Seng Avenue, #07-01 Natural Cool Lifestyle Hub, Singapore 534119 for three (3) months from the date hereof. By Order of the Board Leaw Wei Siang Company Secretary 22 January 2013 About Natural Cool Holdings Limited Established in 1989 and listed on Catalist (formerly known as SESDAQ) in May 2006, Natural Cool provides installation, maintenance, repair and replacement services for air-conditioning systems to the residential segment, both public and private; and commercial sectors, which include factories, offices, condominiums, schools and hospitals, in Singapore. In addition, the Group sells air-conditioning components and tools used for the installation and servicing of airconditioning business. The Group also manufactures and sells switchgears through mechanical and electrical ('M&E ) contractors to public and private property developments. Started in 2003, the Group s switchgear division designs and manufactures switchgear products customised to meet specific requirements of its customers. 8