CIRCULAR DATED 3 JUNE 2011 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY. If you are in any doubt in relation to this Circular or as to the course of action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. The Singapore Exchange Securities Trading Limited ( SGX-ST ) assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. If you have sold or transferred all your shares in the capital of JK Yaming International Holdings Ltd ( JK Yaming or Company ), you should immediately forward this Circular to the purchaser or transferee or to the bank, stockbroker or agent through whom the sale was effected for onward transmission to the purchaser or transferee. This Circular shall not be construed as, and may not be used for the purpose of, and does not constitute a notice or proposal or advertisement or an offer or invitation or solicitation in any jurisdiction or in any circumstance in which such a notice or proposal or advertisement or an offer or invitation or solicitation is unlawful or not authorised, or to any person to whom it is unlawful to make such a notice or proposal or advertisement or an offer or invitation or solicitation. JK Yaming International Holdings Ltd (Incorporated in the Republic of Singapore) (Company Registration No. 199906353N) CIRCULAR TO SHAREHOLDERS in relation to the VOLUNTARY UNCONDITIONAL CASH OFFER by CIMB Bank Berhad (13491-P) Singapore Branch (Incorporated in Malaysia) for and on behalf of Luma Investments Limited (Incorporated in the Cayman Islands) Company Registration No. 252630 to acquire all the issued and paid-up ordinary shares in the capital of the Company Independent Financial Adviser to the Independent Directors AmFraser Securities Pte. Ltd. SHAREHOLDERS SHOULD NOTE THAT THE OFFER DOCUMENT STATES THAT THE OFFER WILL CLOSE AT 5.30 P.M. ON 20 JUNE 2011 OR SUCH LATER DATE(S) AS MAY BE ANNOUNCED FROM TIME TO TIME BY OR ON BEHALF OF THE OFFEROR.
Table of Contents CORPORATE INFORMATION... 2 DEFINITIONS... 3 SUMMARY TIMETABLE... 7 LETTER TO SHAREHOLDERS... 8 1. INTRODUCTION... 8 2. THE OFFER... 9 3. NO CONDITION TO THE OFFER... 10 4. INFORMATION ON THE OFFEROR AND CONSORTIUM... 10 5. RATIONALE FOR THE OFFER... 14 6. OFFEROR S INTENTION FOR THE COMPANY... 14 7. FINANCIAL EVALUATION OF THE OFFER... 15 8. NO COMPETING OFFER RECEIVED... 16 9. DISCLOSURES... 16 10. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS... 17 11. EXEMPTION RELATING TO DIRECTORS RECOMMENDATIONS... 18 12. RECOMMENDATION OF THE INDEPENDENT DIRECTORS... 18 13. OVERSEAS SHAREHOLDERS... 22 14. INFORMATION PERTAINING TO CPFIS INVESTORS... 23 15. ACTION TO BE TAKEN BY SHAREHOLDERS... 23 16. DIRECTORS RESPONSIBILITY STATEMENT... 23 17. ADDITIONAL INFORMATION... 23 APPENDIX I: LETTER FROM AmFRASER SECURITIES PTE. LTD. TO THE INDEPENDENT DIRECTORS... 24 APPENDIX II: GENERAL INFORMATION ON THE GROUP... 49 APPENDIX III: RELEVANT EXCERPTS FROM THE COMPANY S ARTICLES OF ASSOCIATION... 57 APPENDIX IV: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2010... 65 APPENDIX V: UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 1Q11... 121 APPENDIX VI: STATEMENT OF PROSPECTS... 132 APPENDIX VII: REPORT OF THE AUDITORS ON THE STATEMENT OF PROSPECTS... 133 APPENDIX VIII: LETTER FROM AmFRASER SECURITIES PTE. LTD. IN RELATION TO THE STATEMENT OF PROSPECTS... 134 1
CORPORATE INFORMATION Board of Directors : Ang Chiong Chai (Executive Chairman) : Chen Min (Executive Director) : Tan Boon Kiat @Tan Ka Seng (Executive Director) : Lee Poo Sik (Non-Executive Director) : Dato Ng Kim Poh (Non-Executive Director) : Chen Chiu-Chin Rolla (Non-Executive Director) : Yu Swee Sing (Independent Director) : Seow Seng Wei (Independent Director) : Lee Ah Fong James (Independent Director) Company Secretary : Chua Sin @ Zen Chua Hsin Registered Office : 160 Paya Lebar Road, #08-03 Orion Industrial Building Singapore 409022 Share Registrar : Boardroom Corporate & Advisory Services Pte. Ltd. 50 Raffles Place #32-01 Singapore Land Tower Singapore 048623 Independent Financial Adviser : AmFraser Securities Pte. Ltd. to the Independent Directors in (A member of AmInvestment Bank Group) relation to the Offer 4 Shenton Way #13-01 SGX Centre 2 Singapore 068807 Legal Adviser to the Company in : Shook Lin & Bok LLP relation to the Offer 1 Robinson Road #18-00 AIA Tower Singapore 048542 Auditors of the Company and its : LTC LLP subsidiaries Certified Public Accountants 1 Raffles Place #20-02 One Raffles Place Singapore 048616 2
DEFINITIONS In this Circular, the following definitions apply throughout unless otherwise stated: Board : The Board of Directors of the Company as at the Latest Practicable Date CDP : The Central Depository (Pte) Limited Circular : This circular to Shareholders in relation to the Offer (including the Letter from the IFA to the Independent Directors at Appendix I of this Circular and the other Appendices) and any other document which may be issued by or on behalf of the Company to amend, revise, supplement or update this circular from time to time CIMB : CIMB Bank Berhad, Singapore Branch Closing Date : 5.30 p.m. (Singapore time) on 20 June 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, such date being the last date and time for the lodgement of acceptances of the Offer Code : The Singapore Code on Take-overs and Mergers Companies Act : The Companies Act, Chapter 50 of Singapore Consortium : Shall have the meaning ascribed to it in Section 7.3 of the Letter to Shareholders in the Offer Document Consortium Agreement : Shall have the meaning ascribed to it in Section 7.4(a) of the Letter to Shareholders in the Offer Document Consortium Irrevocable : Shall have the meaning ascribed to it in Section 7.4(b) of the Acceptance Undertakings Letter to Shareholders in the Offer Document Consortium Irrevocable : Shall have the meaning ascribed to it in Section 7.4(c) of the Instruction Undertakings Letter to Shareholders in the Offer Document Consortium Shares : Shall have the meaning ascribed to it in Section 7.4(b) of the Letter to Shareholders in the Offer Document CPF : The Central Provident Fund CPF Agent Banks : Agent banks included under the CPFIS CPFIS : Central Provident Fund Investment Scheme CPFIS Investors : Investors who have purchased Shares using their CPF contributions under the CPFIS Directors : The directors of the Company as at the Latest Practicable Date Encumbered Consortium : Shall have the meaning ascribed to it in Section 7.4(c) of the Shares Letter to Shareholders in the Offer Document FAA : Form of Acceptance and Authorisation in respect of the Offer, applicable to Depositors, which forms part of the Offer Document 3
DEFINITIONS FAT : Form of Acceptance and Transfer in respect of the Offer, applicable to Shareholders whose Shares are held in scrip form, which forms part of the Offer Document FY : Financial year ending or ended 31 December FY2010 Final Dividend : The first and final dividend of S$0.006 for each Share in respect of FY2010 declared by the board of directors of JK Yaming on 22 February 2011 and approved by Shareholders at the annual general meeting of JK Yaming held on 28 April 2011 Group : JK Yaming and its subsidiaries IFA or AmFraser : AmFraser Securities Pte. Ltd., the independent financial adviser to the Independent Directors in relation to the Offer IFA Letter : The letter from AmFraser dated 3 June 2011 to the Independent Directors in relation to the Offer as set out in Appendix I to this Circular Independent Directors : The directors of JK Yaming who are considered to be independent for the purposes of the Offer namely Tan Boon Kiat @ Tan Ka Seng, Lee Poo Sik, Chen Chiu-Chin Rolla, Yu Swee Sing, Seow Seng Wei and Lee Ah Fong James JK Yaming or the Company : JK Yaming International Holdings Ltd Latest Practicable Date : 25 May 2011, being the latest practicable date prior to the printing of this Circular Listing Manual : The Listing Manual of the SGX-ST, as amended up to the Latest Practicable Date Market Day : A day on which the SGX-ST is open for trading of securities Offer : The voluntary unconditional cash offer made by CIMB, for and on behalf of the Offeror, to acquire all the Shares on the terms and subject to the conditions set out in the Offer Document, the FAA and the FAT, as such offer may be amended, extended and revised from time to time by or on behalf of the Offeror Offer Announcement : The announcement relating to the Offer released by CIMB, for and on behalf of the Offeror, on the Offer Announcement Date Offer Announcement Date : 4 May 2011, being the date of the Offer Announcement Offer Document : The offer document dated 23 May 2011 containing the formal terms of the Offer and any other document(s) which may be issued by CIMB, for and on behalf of the Offeror, to amend, revise, supplement or update the offer document from time to time Offer Price : S$0.55 for each Share Offeror : Luma Investments Limited 4
DEFINITIONS Overseas Shareholder : Shall have the meaning ascribed to it in Section 12.1 of the Letter to Shareholders in this Circular PRC : People s Republic of China Register : The register of Shareholders, as maintained by the Registrar Registrar : Boardroom Corporate & Advisory Services Pte. Ltd. Relevant Acceptance Forms : Shall have the meaning ascribed to it in Section 15.1 of the Letter to Shareholders in the Offer Document Securities Account : A securities account maintained by a Depositor with CDP, but does not include a securities sub-account SFA : The Securities and Futures Act, Chapter 289 of Singapore SGX-ST : Singapore Exchange Securities Trading Limited Shareholders : Persons who are registered as holders of Shares in the Register and Depositors who have Shares entered against their names in the Depository Register Shares : Ordinary shares in the capital of JK Yaming SIC : The Securities Industry Council of Singapore VWAP : Volume weighted average price RM : Ringgit Malaysia, being the lawful currency of Malaysia S$ : Singapore dollars, being the lawful currency of Singapore US$ : United States dollars, being the lawful currency of the United States of America % or per cent. : Percentage or per centum 1Q11 : The three months ended 31 March 2011 Acting in Concert. The terms acting in concert shall have the meaning ascribed to it in the Code. Depositors. The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. Genders. 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. References to persons shall, where applicable, include corporations. Headings. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular. Rounding. Any discrepancies in figures included in this Circular between the amounts listed and their actual values are due to rounding. Accordingly, figures may have been adjusted to ensure that totals or sub-totals shown, as the case may be, reflect an arithmetic aggregation of the figures that precede them. 5
DEFINITIONS Statutes. 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 in the Companies Act, the Securities and Futures Act, the Code or the Listing Manual (or any statutory modification thereof) and used in this Circular shall, where applicable, have the meaning assigned to it under the Companies Act, the Securities and Futures Act, the Code or the Listing Manual (or any statutory modification thereof), as the case may be, unless the context otherwise requires. Subsidiary, Related Corporations and Associated Company. The expressions subsidiary and related corporation shall have the meanings ascribed to them in Sections 5 and 6 of the Companies Act respectively. The expression associated companies in relation to the Group, shall mean a corporation in which the Group holds, directly or indirectly, at least 20 per cent. but not more than 50 per cent. of its issued shares. Time and Date. Any reference to a time of the day and date in this Circular shall be a reference to Singapore time and date respectively, unless otherwise stated. Forward-looking Statements All statements other than statements of historical facts included in this Circular are or may be forwardlooking statements. Forward-looking statements include but are not limited to those using words such as seek, expect, anticipate, estimate, believe, intend, project, plan, strategy, forecast and similar expressions or future or conditional verbs such as if, will, would, shall, should, can, could, may and might. These statements reflect the Company s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and neither the Company nor the IFA guarantees the performance of such forward-looking statements or undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of the SGX-ST and/or any other regulatory or supervisory body or agency. 6
SUMMARY TIMETABLE Date of despatch of Offer Document : 23 May 2011 Date of despatch of this Circular : No later than 6 June 2011 Closing Date : 5.30 p.m. (Singapore time) on 20 June 2011 or such later date(s) as may be announced from time to time by or on behalf of the Offeror Date of settlement of consideration for : Within 10 days after the date of receipt of each valid the Shares tendered acceptance 7
LETTER TO SHAREHOLDERS JK Yaming International Holdings Ltd (Incorporated in the Republic of Singapore) (Company Registration No. 199906353N) Directors: Registered Office: Ang Chiong Chai (Executive Chairman) 160 Paya Lebar Road, #08-03 Chen Min (Executive Director) Orion Industrial Building Tan Boon Kiat @Tan Ka Seng (Executive Director) Singapore 409022 Lee Poo Sik (Non-Executive Director) Dato Ng Kim Poh (Non-Executive Director) Chen Chiu-Chin Rolla (Non-Executive Director) Yu Swee Sing (Independent Director) Seow Seng Wei (Independent Director) Lee Ah Fong James (Independent Director) 3 June 2011 To: The Shareholders of JK Yaming International Holdings Ltd Dear Sir/Madam VOLUNTARY UNCONDITIONAL CASH OFFER BY CIMB BANK BERHAD FOR AND ON BEHALF OF LUMA INVESTMENTS LIMITED TO ACQUIRE ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE CAPITAL OF THE COMPANY 1. INTRODUCTION On 4 May 2011, CIMB, for and on behalf of the Offeror, announced that the Offeror intended to make a voluntary unconditional cash offer for all the Shares. An announcement in relation to the Offer was then made by the Company on the next day following receipt of the Offer Announcement. Shareholders should have by now received a copy of the Offer Document containing the formal offer by CIMB, for and on behalf of the Offeror, and the Relevant Acceptance Forms. The principal terms of the Offer are set out in Section 2 of the Offer Document. Shareholders are advised to read the terms and conditions of the Offer set out in the Offer Document carefully. AmFraser Securities Pte. Ltd., a member of AmInvestment Bank Group has been appointed as the IFA to the Independent Directors in relation to the Offer. The purpose of this Circular is to provide relevant information to the Shareholders pertaining to the Offer and to set out the recommendation of the Independent Directors and the opinion of the IFA to the Independent Directors in relation to the Offer. Shareholders should consider carefully the recommendation of the Independent Directors and the opinion of the IFA before deciding whether or not to accept the Offer. 8
LETTER TO SHAREHOLDERS 2. THE OFFER Based on the information set out in the Offer Document, CIMB has, for and on behalf of the Offeror, made the Offer to acquire the Shares in accordance with Section 139 of the Securities and Futures Act and Rule 15 of the Code (unless otherwise exempted by the SIC), on the terms and subject to the conditions set out in the Offer Document, the FAA and the FAT. 2.1 Offer Price Based on Section 2.1 of the Offer Document, the Offer will be made on the following basis: For each Share: S$0.55 in cash 2.2 Right to Revise Offer Based on Section 2.2 of the Offer Document, the Offeror reserves its right to revise the terms of the Offer at such time and in such manner as it may consider appropriate. If the Offer Price is revised, all Shareholders who have previously accepted the Offer will receive the revised consideration. 2.3 Offer Shares The Offer is extended to all Shares, including any and all Shares owned, controlled or agreed to be acquired by any person acting or deemed to be acting in concert with the Offeror in connection with the Offer, including, without limitation, the Consortium Shares and the Encumbered Consortium Shares, in accordance with Section 139 of the SFA and the Code. 2.4 No Encumbrances Based on the Offer Document, the Shares will be acquired: (a) (b) (c) fully paid; free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever; and together with all rights, benefits and entitlements attached thereto as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain the FY2010 Final Dividend, as well as all other dividends, rights and other distributions (if any) declared, paid or made by JK Yaming on or after the Offer Announcement Date. As stated in the Offer Document, if the FY2010 Final Dividend is paid or made by JK Yaming, or any other dividend, rights or other distribution is announced, declared, paid or made by JK Yaming, on or after the Offer Announcement Date, the Offeror will reduce the Offer Price by the amount of the FY2010 Final Dividend or such other dividend, rights or other distribution. 2.5 Warranty As stated in Section 4 of the Offer Document, a Shareholder who tenders his Shares in acceptance of the Offer will be deemed to warrant that he sells such Shares as or on behalf of the beneficial owner(s) thereof, (a) fully paid, (b) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption and any other third party rights or interests of any nature whatsoever and (c) together with all rights, benefits and entitlements attached thereto as of the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain the FY2010 Final Dividend, as well as all other dividends, rights and other distributions (if any) declared, paid or made by JK Yaming on or after the Offer Announcement Date. 9
LETTER TO SHAREHOLDERS 2.6 Further Details of the Offer Further details of the Offer are set out in Appendix 1 to the Offer Document, including details on, amongst other things, (i) the duration of the Offer; (ii) the settlement of the consideration for the Offer; (iii) the requirements relating to the announcement of the level of acceptances of the Offer; and (iv) the right of withdrawal of acceptances of the Offer. Copies of the Offer Announcement and the Offer Document are available on the website of the SGX-ST at http://www.sgx.com. 2.7 Closing Date As stated in the Offer Document, the Offer will remain open for acceptance until 5.30 p.m. (Singapore time) on 20 June 2011, or such later date(s) as may be announced from time to time by or on behalf of the Offeror. 2.8 Procedures for Acceptance of the Offer Details on the procedures for acceptance of the Offer are set out in Appendix 2 to the Offer Document, the FAA and the FAT. 3. NO CONDITION TO THE OFFER The Offer is not subject to any conditions and is unconditional in all respects. 4. INFORMATION ON THE OFFEROR AND CONSORTIUM 4.1 The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 7. INFORMATION ON THE OFFEROR AND CONSORTIUM 7.1 Offeror. The Offeror is an investment holding company incorporated under the laws of the Cayman Islands on 25 February 2011. The Offeror has not carried out any business since its incorporation, except to enter into certain agreements in connection with the formation of the Consortium and to purchase Shares from the open market as set out in Appendix 5 to this Offer Document. As at the Latest Practicable Date, the Offeror has an issued and paid-up share capital of US$0.001 consisting of 100 ordinary shares of par value US$0.00001 each ( Offeror Shares ), which are all held by CVCIGP Luma Holdings. As at the Latest Practicable Date, the Directors are Mr Ji Hong Min, Mr Chick Leung Lam (Gordan Lam), Mr Tan Shao Ming, Mr Yiqiao Ren and Mr Yeo Khee Huat, Andrew. Further information on the Offeror is set out in Appendix 3 to this Offer Document. 7.2 Offeror Group. The Offeror is a wholly-owned subsidiary of CVCIGP Luma Holdings. CVCIGP Luma Holdings is an investment holding company whose voting shares are held entirely by CVCI GP and whose remaining equity interests are held by the CVCI Funds. Each of the CVCI Funds is a Cayman Islands exempted limited partnership. The general partner of the CVCI Funds is CVCI GP, a company incorporated with limited liability in Jersey. The ultimate holding company of CVCI GP is Citigroup Inc.. CVCI GP is advised by CVCI Advisers in respect of its investments worldwide. CVCI Advisers is in turn advised by CVCI Asia, a Bahamian entity with operations in Hong Kong, in respect of investments in Asia Pacific. 10
LETTER TO SHAREHOLDERS 7.3 Consortium. The Offeror and CVCIGP Luma Holdings have formed a consortium ( Consortium ) with the Consortium Members to make the Offer. The senior management of the Company who have joined the Consortium are: (a) (b) (c) ACC, the Executive Chairman of the Company; CM, an Executive Director of the Company; and ZQF, the General Manager of Fujian J.K. Wiring Systems Co., Ltd., a subsidiary of JK Yaming. 7.4 Consortium Arrangements. The arrangements comprised in the Consortium include the following: (a) the Offeror and CVCIGP Luma Holdings have entered into an agreement (the Consortium Agreement ) with the Consortium Members, pursuant to which: (i) (ii) (iii) CVCIGP Luma Holdings has agreed to provide funding to the Offeror to satisfy, inter alia, full acceptances of the Offer (other than acceptances of the Offer in respect of the aggregate Relevant Number of Consortium Shares); each of the Roll-over Consortium Members has agreed to subscribe in cash for Offeror Shares and the obligation of each Roll-over Consortium Member to pay for the new Offeror Shares in cash will be set off against the obligation of the Offeror to pay the aggregate Offer Price to that Roll-over Consortium Member for the Relevant Number of Consortium Shares tendered in acceptance of the Offer pursuant to the Consortium Irrevocable Acceptance Undertakings; and CVCIGP Luma Holdings and NTCP SPV have each agreed to subscribe in cash for new Offeror Shares, with the obligation of CVCIGP Luma Holdings to pay for its new Offeror Shares in cash being set off, to the extent applicable, against the funding it has provided to the Offeror in respect of the Offer; (b) (c) each of the Roll-over Consortium Members, ACC and JKPL has given irrevocable undertakings (the Consortium Irrevocable Acceptance Undertakings ) in favour of the Offeror and CVCIGP Luma Holdings to accept the Offer in respect of an aggregate 81,166,170 Shares (the Consortium Shares ), representing approximately 39.99 per cent. of the Shares in issue as at the Latest Practicable Date; as ACC has granted charges over 36,130,000 Shares ( ACC Encumbered Consortium Shares ), representing approximately 17.80 per cent. of the Shares in issue as at the Latest Practicable Date, in favour of various financial institutions (the Relevant Financial Institutions ) pursuant to the ACC Share Margin Financing Arrangements with such Relevant Financial Institutions, and JKHSB has granted charges over 7,000,000 Shares ( JKHSB Encumbered Consortium Shares, and together with the ACC Encumbered Consortium Shares, the Encumbered Consortium Shares ), representing approximately 3.45 per cent. of the Shares in issue as at the Latest Practicable Date, to Maybank as security in respect of outstanding loans made by Maybank to JKHSB s subsidiaries (the JKHSB Maybank Loans ), each of ACC and JKHSB has given irrevocable undertakings ( Consortium Irrevocable Instruction Undertakings ) in favour of the Offeror and CVCIGP Luma Holdings to instruct and/or procure the Relevant Financial Institutions and Maybank to accept the Offer, subject to the agreement of such Relevant Financial Institutions and Maybank, in respect of the ACC Encumbered Consortium Shares and the JKHSB Encumbered Consortium Shares respectively. The Encumbered Consortium Shares represent in aggregate approximately 21.25 per cent. of the Shares in issue as at the Latest Practicable Date; and 11
LETTER TO SHAREHOLDERS (d) each of the Roll-over Consortium Members, ACC and JKPL has agreed to waive their right to receive payment of the Offer Price in respect of the Consortium Shares within the timeline for settlement under the Code and has agreed to receive the payment of the aggregate Offer Price in the manner provided under the terms of the Consortium Agreement. Each of ACC and JKHSB has agreed with the Offeror and CVCIGP Luma Holdings that payment of the Offer Price in respect of the Encumbered Consortium Shares will be settled within the timeline for settlement under the Code and will not be deferred. Further information on the Consortium is found in Section 7.5 and 7.6 of the Offer Document. 4.2 Irrevocable Undertakings received by the Offeror. The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 8. IRREVOCABLE UNDERTAKINGS 8.1 Consortium Irrevocable Acceptance Undertakings. The following table sets out the Consortium Members who, as at the Latest Practicable Date, have provided the Consortium Irrevocable Acceptance Undertakings in respect of the Consortium Shares: Percentage of Shares Consortium Member No. of Shares in issue (%) ACC 6,040 0.003 JKHSB 41,322,225 20.36 JKPL 900,000 0.44 Nanping 17,024,750 8.39 Amko 21,913,155 10.80 Total 81,166,170 39.99 The Consortium Irrevocable Acceptance Undertakings will terminate on, inter alia, the date on which the Offer lapses or is withdrawn. 8.2 Consortium Irrevocable Instruction Undertakings. As set out in Section 7.4(c) above, ACC has granted charges over the ACC Encumbered Consortium Shares in favour of the Relevant Financial Institutions pursuant to his share margin financing arrangements with such Relevant Financial Institutions (the ACC Share Margin Financing Arrangements ). The Offeror understands that, pursuant to the terms of the various agreements entered into by ACC with the Relevant Financial Institutions in connection with the ACC Share Margin Financing Arrangements, ACC, inter alia, may not sell, attempt or agree to sell, transfer, assign, charge or otherwise dispose of or give any unconditional or conditional option, warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree, conditionally or unconditionally, to create) or have any outstanding security over the ACC Encumbered Consortium Shares (other than the charges over the ACC Encumbered Consortium Shares granted to the Relevant Financial Institutions). The Offeror understands that the aggregate amount outstanding under the ACC Share Margin Financing Arrangements is S$5,900,000. 12
LETTER TO SHAREHOLDERS As also set out in Section 7.4(c) above, JKHSB has granted charges over the JKHSB Encumbered Consortium Shares in favour of Maybank as security in respect of the JKHSB Maybank Loans. The Offeror understands that the aggregate amount outstanding under the JKHSB Maybank Loans as at 13 May 2011 is approximately RM1,150,147 (equivalent to approximately S$471,352 based on an exchange rate of S$1.00 : RM2.4401) and pursuant to the terms of the charges entered into by JKHSB as security for the JKHSB Maybank Loans, JKHSB, inter alia, may not (and may not agree, conditionally or unconditionally, to) sell, transfer, lend or otherwise dispose of or give any conditional or unconditional option, warrant or other right to subscribe for, purchase or otherwise acquire or create (or agree, conditionally or unconditionally, to create) or have any outstanding security on or over the JKHSB Encumbered Consortium Shares (other than the charges granted to Maybank as security for the JKHSB Maybank Loans). In view of the restrictions set out in the terms of the ACC Share Margin Financing Arrangements and the JKHSB Maybank Loans, ACC and JKHSB have therefore provided the Consortium Irrevocable Instruction Undertakings in respect of the ACC Encumbered Consortium Shares and the JKHSB Encumbered Consortium Shares respectively. ACC and JKHSB have each confirmed to the Offeror that as at the Latest Practicable Date, he/it is in full compliance with, and he/it is not in default of and has not defaulted on, any of his/its obligations under the ACC Share Margin Financing Arrangements or the JKHSB Maybank Loans (as the case may be), and nothing has occurred which is or would, directly or indirectly constitute an event of default or a similar event under the terms of any of the ACC Share Margin Financing Arrangements or the JKHSB Maybank Loans (as the case may be). The Consortium Irrevocable Instruction Undertakings will terminate on, inter alia, the date on which the Offer lapses or is withdrawn. 8.3 Phihong Irrevocable Undertaking. As at the Latest Practicable Date, the Offeror has also received an irrevocable undertaking ( Phihong Irrevocable Undertaking ) from another substantial shareholder of JK Yaming, Phihong, to accept the Offer in respect of its 38,511,000 Shares, representing approximately 18.98 per cent. of the Shares in issue as at the Latest Practicable Date. For the avoidance of doubt, Phihong is not, and will not be, a member of the Consortium. The Phihong Irrevocable Undertaking will terminate on, inter alia, the date on which the Offer lapses or is withdrawn. 4.3 Based on publicly available information, as at the Latest Practicable Date, the aggregate number of Shares subject to the Consortium Irrevocable Acceptance Undertakings and the Phihong Irrevocable Undertaking amounts to 119,677,170 Shares, representing approximately 58.97 per cent. of the Shares in issue. Assuming the Relevant Financial Institutions and Maybank agree to and, in accordance with each of ACC s and JKHSB s instructions, accept the Offer in respect of all of the Encumbered Consortium Shares, and taking into account the Shares subject to the Consortium Irrevocable Acceptance Undertakings and the Phihong Irrevocable Undertaking, the Offeror would obtain acceptances in respect of an aggregate 162,807,170 Shares, representing approximately 80.22 per cent. of the Shares in issue as at the Latest Practicable Date. 13
LETTER TO SHAREHOLDERS 5. RATIONALE FOR THE OFFER The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 10. RATIONALE FOR THE OFFER 10.1 Opportunity for Shareholders to Realise their Investment. The Offer presents Shareholders with an opportunity to realise their investment in the Shares at a premium of approximately 4.7 per cent., 7.5 per cent., 10.7 per cent. and 14.9 per cent. over the onemonth VWAP per Share on the SGX-ST of S$0.5251, three-month VWAP per Share on the SGX-ST of S$0.5115, six-month VWAP per Share on the SGX-ST of S$0.4966 and 12- month VWAP per Share on the SGX-ST of S$0.4785 respectively, in the period up to and including the Offer Announcement Date, without incurring brokerage and other trading costs. 10.2 Low Trading Liquidity of Shares. The trading liquidity of the Shares has also been low, with an average daily trading volume of approximately 72,758 Shares over the 12-month period up to and including the Offer Announcement Date, representing approximately 0.04 per cent. of the Shares in issue. The Offer will provide an exit opportunity for those Shareholders who wish to realise their entire investment in the Shares but find it difficult to do so as the result of the low trading liquidity of the Shares. 10.3 Greater Management Flexibility. The Offeror believes that the privatisation of JK Yaming will provide JK Yaming with greater management flexibility to manage and develop its businesses, optimise the use of resources and facilitate the implementation of any strategic initiatives and/or operation changes. 6. OFFEROR S INTENTION FOR THE COMPANY The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 11.1 Future Plans. The Offeror has presently no intention to (a) introduce any major changes to the business of JK Yaming, (b) re-deploy the fixed assets of JK Yaming or (c) discontinue the employment of the employees of the JK Yaming Group. Following the close of the Offer, the Offeror will undertake a comprehensive review of the businesses and fixed assets of the JK Yaming Group to determine the optimal business strategy for JK Yaming. 11.2 Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, if the Offeror receives valid acceptances pursuant to the Offer or acquires Shares from the Despatch Date otherwise than through valid acceptances of the Offer, in respect of not less than 90 per cent. of the total number of Shares in issue as at the close of the Offer (other than those already held by the Offeror, its related corporations or their respective nominees as at the Despatch Date), the Offeror will be entitled to exercise its right to compulsorily acquire, at the Offer Price, all the Shares held by Shareholders who have not accepted the Offer ( Non- Assenting Shareholders ). In the event that the Offeror becomes entitled to exercise its right under Section 215(1) of the Companies Act, the Offeror intends to exercise its right to compulsorily acquire all the Shares not acquired under the Offer. The Offeror will then proceed to delist JK Yaming from the SGX-ST. 14
LETTER TO SHAREHOLDERS Non-Assenting Shareholders have the right under and subject to Section 215(3) of the Companies Act to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer or otherwise, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90 per cent. or more of the total number of Shares. Non-Assenting Shareholders who wish to exercise such right are advised to seek their own independent advice. 11.3 Listing Status. Pursuant to Rule 1105 of the Listing Manual, in the event that the Offeror and parties acting in concert with it, as a result of the Offer or otherwise, own or control more than 90 per cent. of the Shares (excluding treasury shares), the SGX-ST may suspend the trading of the Shares until such time when the SGX-ST is satisfied that at least 10 per cent. of the Shares (excluding treasury shares) are held by at least 500 Shareholders who are members of the public. In addition, pursuant to Rule 724 of the Listing Manual, if the percentage of the Shares (excluding treasury shares) held in public hands falls below 10 per cent., JK Yaming must, as soon as practicable, announce that fact and the SGX-ST may suspend trading of all the Shares. Rule 725 of the Listing Manual provides that the SGX-ST may allow JK Yaming a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of Shares in public hands to at least 10 per cent., failing which JK Yaming may be delisted. The Offeror intends to make JK Yaming its wholly-owned subsidiary. It is therefore not the intention of the Offeror to preserve the listing status of JK Yaming and the Offeror does not intend to take any steps for any trading suspension in the Shares to be lifted in the event that, inter alia, less than 10 per cent. of the Shares (excluding treasury shares) are held in public hands. 7. FINANCIAL EVALUATION OF THE OFFER The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 12. FINANCIAL EVALUATION OF THE OFFER The Offer Price of S$0.55 for each Share represents 1 : (a) (b) (c) (d) a premium of approximately 4.8 per cent. to the last transacted price of S$0.5250 per Share as quoted on the SGX-ST on the Offer Announcement Date; a premium of approximately 4.7 per cent. to the VWAP of approximately S$0.5251 per Share on the SGX-ST for the one-month period up to and including the Offer Announcement Date; a premium of approximately 7.5 per cent. to the VWAP of approximately S$0.5115 per Share on the SGX-ST for the three-month period up to and including the Offer Announcement Date; a premium of approximately 10.7 per cent. to the VWAP of approximately S$0.4966 per Share on the SGX-ST for the six-month period up to and including the Offer Announcement Date; 1 The Share prices in Sections 12(a) to 12(f) are based on data extracted from Bloomberg and the website of the SGX-ST. 15
LETTER TO SHAREHOLDERS (e) (f) a premium of approximately 14.9 per cent. to the VWAP of approximately S$0.4785 per Share on the SGX-ST for the 12-month period up to and including the Offer Announcement Date; and the highest intra-day traded price achieved in the five years prior to the Offer Announcement Date. The Offer Price of S$0.55 for each Share also represents 2 : (i) (ii) an implied price to earnings ratio of approximately 9.63 times based on the latest announced unaudited consolidated earnings per Share of approximately S$0.057 in the 12-month period from 1 April 2010 to 31 March 2011; and a premium of approximately 45.9 per cent. to the latest announced unaudited consolidated net asset value per Share of approximately S$0.377 as at 31 March 2011. 8. NO COMPETING OFFER RECEIVED As at the Latest Practicable Date, no competing offer has been received by the Company. 9. DISCLOSURES The following has been extracted from the Offer Document and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the Offer Document. Shareholders are advised to read the extract below carefully: 14. DISCLOSURES 14.1 Holdings and Dealings in Shares. As at the Latest Practicable Date, the Offeror and parties acting in concert with the Offeror own, control or have agreed to acquire an aggregate of 126,688,170 Shares, representing approximately 62.42 per cent. of the Shares in issue as the Latest Practicable Date. Appendix 5 to this Offer Document sets out: (a) (b) the holdings of Shares of the Offeror, its Directors and parties acting in concert with the Offeror as at the Latest Practicable Date; and the dealings in Shares by the Offeror, its Directors and parties acting in concert with the Offeror during the period commencing three (3) months prior to the Offer Announcement Date and ending on the Latest Practicable Date (the Reference Period ). 14.2 No Other Holdings and Dealings. Save as disclosed in this Offer Document, based on the latest information available to the Offeror and parties acting in concert with the Offeror: (a) as at the Latest Practicable Date, none of the Offeror, its Directors and parties acting in concert with the Offeror, owns, controls or has agreed to acquire any (i) Shares, (ii) securities which carry voting rights in the Company, (iii) securities which are convertible into Shares or securities which carry voting rights in the Company, or (iv) rights to subscribe for, or options in respect of, such Shares or securities (collectively, JK Yaming Securities ); and 2 Based on the financial results of the JK Yaming Group for (a) the nine months from 1 April 2010 to 31 December 2010 as derived from the audited consolidated financial results of the JK Yaming Group for FY2010 but excluding the unaudited consolidated financial results for the three months from 1 January 2010 to 31 March 2010 and (b) the three months ended 31 March 2011 as derived from the unaudited consolidated financial results of the JK Yaming Group for the three months ended 31 March 2011 announced by JK Yaming on 10 May 2011. 16
LETTER TO SHAREHOLDERS (b) none of the Offeror, its Directors and parties acting in concert with the Offeror has dealt for value in any JK Yaming Securities during the Reference Period. Further information on the relevant disclosures are found in Appendix 5 of the Offer Document. 10. INTEREST OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS The tables below set out the Directors and Substantial Shareholders interests in the Company as at the Latest Practicable Date, based on the information in the Register of Directors Shareholdings and the Register of Substantial Shareholders, respectively: Number of Shares Direct Deemed Total % of total Director Interest Interest Interest Shares Ang Chiong Chai 36,136,040 49,222,225 (1) 85,358,265 40.06 Dato Ng Kim Poh 827,000 21,913,155 (3) 22,740,155 11.20 Chen Min 17,024,750 (4) 17,024,750 8.39 Tan Boon Kiat @ Tan Ka Seng 5 5 0.0000024 Lee Poo Sik 100,000 48,322,225 48,422,225 23.86 Apart from the above, no other Director has any direct or deemed interest in the Shares. Direct Interest Deemed Interest No. of % of No. of % of Substantial Shareholder Shares Shares Shares Shares Ang Chiong Chai 36,136,040 17.80 49,222,225 (1) 24.25 Juan Kuang Holdings Sdn Bhd 48,322,225 23.81 Phihong International Corp 38,511,000 18.98 Amko Industrial Co., Ltd 21,913,155 10.80 Nanping Holdings Ltd 17,024,750 8.39 Juan Kuang (Pte) Ltd 900,000 0.44 48,322,225 (2) 23.81 Dato Ng Kim Poh 827,000 0.41 21,913,155 (3) 10.80 Zheng Qingfa 17,024,750 (4) 8.39 Chen Min 17,024,750 (4) 8.39 Notes: 1. Deemed interest by virtue of his interests (direct of 5.5% and indirect through Juan Kuang (Pte) Ltd of 40.6%) in Juan Kuang Holdings Sdn Bhd, and direct interest of 56.62% in Juan Kuang (Pte) Ltd. 2. Deemed interest by virtue of its direct interest of 40.6% in Juan Kuang Holdings Sdn Bhd. 3. Deemed interest by virtue of his direct interest of 96% in Amko Industrial Co., Ltd. 4. Deemed interest by virtue of their direct interest of 50% each, in Nanping Holdings Ltd. 17
LETTER TO SHAREHOLDERS 11. EXEMPTION RELATING TO DIRECTORS RECOMMENDATIONS 11.1 Non Independent Directors Director Position within Company Ang Chiong Chai Executive Chairman Chen Min Executive Director Dato Ng Kim Poh Non-Executive Director Ang Chiong Chai, Chen Min and Dato Ng Kim Poh are also members of the Consortium. They therefore consider themselves as having an irreconcilable conflict of interest in relation to the requirement for them to make any recommendation to Shareholders on the Offer. The Company made an application to the SIC on 19 May 2011 to seek the SIC s confirmation that Ang Chiong Chai, Chen Min and Dato Ng Kim Poh will be exempted from assuming any responsibilities for any recommendations on the Offer that the Board may make to the Shareholders pursuant to Rule 8.3 of the Code. In view of the positions of conflict of interest that Ang Chiong Chai, Chen Min and Dato Ng Kim Poh are in as parties acting in concert with the Offeror, it would be inappropriate for Ang Chiong Chai, Chen Min and Dato Ng Kim Poh to assume any responsibilities for making a recommendation on the Offer to Shareholders. 11.2 SIC Rulings The SIC had ruled on 20 May 2011 that it exempted Ang Chiong Chai, Chen Min and Dato Ng Kim Poh from the requirement to make a recommendation on the Offer to Shareholders as they face irreconcilable conflicts of interests in doing so as parties acting in concert with the Offeror. They must nonetheless, accept responsibility for the accuracy of facts stated and opinions expressed in documents issued by, or on behalf of, the Company to Shareholders in connection with the Offer. 12. RECOMMENDATION OF THE INDEPENDENT DIRECTORS Shareholders should read and carefully consider the recommendation of the Independent Directors, AmFraser s opinion to the Independent Directors on the Offer and the letter from AmFraser in relation to the Statement of Prospects in their entirety before deciding whether or not to accept or reject the Offer. Shareholders are also advised to read the Offer Document. 12.1 IFA s opinion and advice to the Independent Directors Information relating to the advice of AmFraser to the Independent Directors in relation to the Offer and the key factors it has taken into consideration have been extracted and is set out in italics below. Unless otherwise defined, all terms and expressions used in the extract below shall have the same meanings as those defined in the IFA Letter. Shareholders are also advised to read the following extract in conjunction with, and in the context of the full text of the IFA Letter: 9. OUR ADVICE In arriving at our advice in respect of the Offer, we have taken into account, the factors which we consider to be relevant and to have a significant bearing on our assessment of the Offer. The factors we have considered in our evaluation are discussed in detail in the earlier sections of this letter and which we have relied upon, are as follows:- (a) an assessment of the market quotation and trading liquidity of the Shares as follows: (i) in relation to the Share prices: (aa) since 12 months prior to and including the Offer Announcement Date, the transacted price of the Shares ranged between a low of S$0.400 and a high of S$0.535; 18
LETTER TO SHAREHOLDERS (bb) since 12 months prior to and including the Offer Announcement Date, the Shares have not traded at or above the Net Offer Price; (cc) the Net Offer Price represents premiums of approximately 13.69%, 9.54%, 6.35% and 3.60% to the VWAPs for the 12 months, 6 months, 3 months and 1 month periods prior to and including the Offer Announcement Date, respectively; (dd) the Net Offer Price represents a premium of approximately 2.85% to the VWAP of the Shares of S$0.5289 on the last Market Day on the Offer Announcement Date; (ee) the Net Offer Price represents a discount of 0.93% to the VWAP of S$0.5491 for the period from the Market Day immediately after the Offer Announcement Date to the Latest Practicable Date; and (ff) the Net Offer Price is lower than the last traded price of S$0.545 on 19 May 2011, being the last trading day prior to the Latest Practicable Date. (ii) in relation to the trading liquidity of the Shares: (aa) the average daily traded volume of the Shares of the 12 months, 6 months, 3 months and 1 month periods prior to and including the Offer Announcement Date represents 0.19%, 0.29%, 0.14% and 0.21% of the free float respectively; (bb) during the period from the 12 months prior to the Offer Announcement Date, the Shares were traded on 129 Market Days out of the 252 Market Days (or 51.19% of the total number of Market Days) with an average traded volume of 72,758 Shares per Market Day; (cc) (dd) during the period after the Offer Announcement Date and up to the Latest Practicable Date, the Shares were traded on 5 Market Days out of the 13 Market Days (or 38.46% of the total number of Market Days) with an average traded volume of 302,222 Shares, representing approximately 0.77% of the free float; and in general and other than during the periods around the Offer Announcement Date, liquidity in the market for the Shares have been low both in absolute terms and relative to the free float of the Company. (iii) in relation to the relative performance of the Shares versus the market index, we note that over the 12 months period prior to the Offer Announcement Date and ending on 19 May 2011, being the last trading day prior to the Latest Practicable Date, the Shares have generally outperformed the FSSTI Index in relative terms. (b) a comparison with the valuation statistics of the Comparable Companies as follows: (i) We note that the P/E ratio of the Company implied by the Net Offer Price of 8.80 times is within the range of the P/E ratios of the Comparable Companies, between 0.25 times and 18.23 times, and is lower than the average P/E ratio of the Comparable Companies being 10.12 times and median P/E ratio being 10.50 times. (ii) We note that the P/NAV ratio of the Company implied by the Net Offer Price of 1.45 times is within the range of the P/NAV ratios of the Comparable Companies, between 0.30 times and 36.21 times, and is lower than the average but higher than the median P/NAV ratio being 4.14 times and 0.80 times respectively. 19