1. INTRODUCTION Evergro Properties Limited (Registration No. 199701688C) (Incorporated in the Republic of Singapore on 15 March 1997) PROPOSED RIGHTS ISSUE AND CAPITAL REDUCTION EXERCISE The Board of Directors of Evergro Properties Limited ( Company ) wishes to announce that the Company proposes to carry out: (i) a renounceable non-underwritten rights issue ( Rights Issue ) of 761,848,155 new ordinary shares (each ordinary share, a Share and each new Share to be issued pursuant to the Rights Issue, a Rights Share ) on the basis of three Rights Shares for every two existing Shares (3 for 2) held by Entitled Shareholders (defined below) as at a books closure date to be determined and announced by the Board of Directors ( Books Closure Date ), fractional entitlements to be disregarded; and (ii) a capital reduction exercise pursuant to Section 78C of the Companies Act to reduce the issued share capital of the Company (the Capital Reduction Exercise ) and write off the accumulated losses of the Company as at 31 December 2007 (the Accumulated Losses ) in their entirety in the amount of S$36,522,531.85, subject to the approval of the Company s shareholders ( Shareholders ) at an extraordinary general meeting to be held in connection with the Rights Issue and the Capital Reduction Exercise ( EGM ). An additional listing application, together with a draft circular to be issued to Shareholders containing, inter alia, details of the Rights Issue and the Capital Reduction Exercise, will be made to the Singapore Exchange Securities Trading Limited (the SGX-ST ) in due course. 2. RATIONALE FOR THE RIGHTS ISSUE The Company believes that the Rights Issue will enable the Company to expand its investments and improve its developments in China. Based on the Company s current business plans and its expected financing needs, the Company intends to raise gross proceeds from the Rights Issue of approximately S$170 million. Assuming that the gross proceeds are as set out above, the Company estimates, after deducting estimated costs and expenses associated with the Rights Issue, the net proceeds of the Rights Issue to be approximately S$169 million. The Company intends to utilise the net proceeds of the Rights Issue as follows: 1
Improvement of golf course in Tianjin, the People s Republic of China, held by its subsidiary, Tianjin Pearl Beach International Country Club Co., Ltd... Estimated Application of Net Proceeds As a Percentage of Net Proceeds of the Rights Issue S$ million (%) 20 11.8 Acquisition of land for business purposes.. 120 71.0 Working capital... 29 17.2 Total net proceeds... 169 100% Pending the deployment of the net proceeds from the Rights Issue, the net proceeds may be deposited with banks and/or financial institutions as the Directors may deem appropriate in the interests of the Company and its subsidiaries. As of the date of this announcement, and based on the Company s current business plans and its expected financing needs (which are set out above), the Company estimates that the minimum gross proceeds of the Rights Issue that it proposes to raise, are approximately S$130 million. The Company will announce the final terms of the Rights Issue, including the gross proceeds to be raised from the Rights Issue subsequently, and in any event before the Shares commence trading on an ex-rights basis in relation to the Rights Issue. In the event that the final terms of the Rights Issue are such that the amount of gross proceeds is less than S$170 million, then the Company may seek to vary the allocation among the uses set out in the table above. Any such variation will be publicly announced in the manner set out under paragraph 3.1 Indicative Terms of the Rights Issue below. 3. PARTICULARS OF THE RIGHTS ISSUE 3.1 Indicative Terms of the Rights Issue. The indicative terms contained in this announcement are based on the Company s assessment of current market conditions and its funding requirements and are subject to change. The gross proceeds that the Company intends to raise and the estimated minimum gross proceeds (as mentioned in paragraph 2 above) and the expected discount (as mentioned in paragraph 3.2 below) represent the Company s estimates, based on its current intention and plans regarding its anticipated expenditures, and its assessment of current market conditions, the prevailing market price range of its Shares and its funding requirements. The amount of actual gross proceeds depends on the issue price for each Rights Share ( Issue Price ), and may therefore vary from these estimates. Actual expenditures may also vary from these estimates and the Company may find it necessary or advisable to reallocate the net proceeds within the categories described in paragraph 2 above or to use portions of the net proceeds for other purposes. In the event that the Company decides to reallocate the net proceeds of the Rights Issue for other purposes, the Company will publicly announce 2
its intention to do so through a SGXNET announcement to be posted on the Internet at the website of the SGX-ST, http://www.sgx.com. The Company will announce the finalised details of the Rights Issue, such as the actual gross proceeds, the discount to the then-prevailing market price and the Issue Price, in due course. These details will reflect market conditions and the Company s funding requirements prevailing at the time of issue of the announcement. 3.2 Proposed Terms of the Rights Issue. The Company is proposing the Rights Issue to be offered on a renounceable basis to Entitled Shareholders on the basis of three Rights Shares for every two existing Shares (3 for 2) held by Entitled Shareholders as at the Books Closure Date, fractional entitlements to be disregarded. The Issue Price will be determined by the Company closer to the date of launch of the Rights Issue and is currently expected to be at a discount of up to 15% to the thenprevailing market price. Entitled Shareholders will be entitled to participate in the Rights Issue and receive the Offer Information Statement in relation to the Rights Issue ( OIS ) together with the appropriate application forms and accompanying documents at their respective Singapore addresses. 3.3 Size of Rights Issue. As at the date of this Announcement, there are no outstanding share options, whether granted under the Evergro Employees Share Option Scheme or pursuant to a Share Subscription Agreement dated 17 March 2001 entered into with Keppel Land Limited ( KLL ), that are exercisable before the Books Closure Date. Assuming there is no further change in the outstanding issued Shares of the Company as at the Books Closure Date, the issued share capital of the Company would comprise 507,898,770 Shares and 761,848,155 Rights Shares will be issued. 3.4 Eligibility of Shareholders to Participate in the Rights Issue. The Company proposes to provisionally allot Rights Shares to all Shareholders who are eligible to participate in the Rights Issue ( Entitled Shareholders ) comprising Entitled Depositors and Entitled Scripholders (both as defined below). 3.5 Entitled Depositors. Shareholders with Shares standing to the credit of their Securities Accounts and whose registered addresses with CDP are in Singapore as at the Books Closure Date or who have, at least five Market Days (a Market Day being a day on which the SGX-ST is open for securities trading) prior to the Books Closure Date, provided CDP with addresses in Singapore for the service of notices and documents. 3.6 Entitled Scripholders. Shareholders whose share certificates are not deposited with CDP and who have tendered to Boardroom Corporate & Advisory Services Pte. Ltd. ( Share Registrar ) valid transfers of their Shares and the certificates relating thereto for registration up to the Books Closure Date and whose registered addresses with the 3
Company are in Singapore as at the Books Closure Date or who have, at least five Market Days prior to the Books Closure Date, provided the Share Registrar with addresses in Singapore for the service of notices and documents. 3.7 Foreign Shareholders. For practical reasons and in order to avoid any violation of the securities legislation applicable in countries other than Singapore, the Rights Issue is only made in Singapore and the Rights Shares will NOT be offered to Shareholders with registered addresses outside Singapore as at the Books Closure Date and who have not, at least five Market Days prior to the Books Closure Date, provided the CDP or Share Registrar, as the case may be, with addresses in Singapore for the service of notices and documents ( Foreign Shareholders ). The offer information statement ( Offer Information Statement ) to be issued in relation to and for the purposes of the Rights Issue and the accompanying documents will not be mailed outside Singapore. If it is practicable to do so, arrangements may, at the discretion of the Company, be made for the provisional allotments of Rights Shares, which would otherwise have been provisionally allotted to Foreign Shareholders, to be sold nil-paid on the SGX-ST as soon as practicable after dealings in the provisional allotments of Rights Shares commence. Such sales may, however, only be effected if the Company, in its absolute discretion, determines that a premium can be obtained from such sales, after taking into account the expenses expected to be incurred. The net proceeds from all such sales, after deduction of all expenses therefrom, will be pooled and thereafter distributed to Foreign Shareholders in proportion to their respective shareholdings or, as the case may be, the number of Shares entered against their names in the Depository Register as at the Books Closure Date and sent to them at their own risk by ordinary post, provided that where the amount of net proceeds to be distributed to any single Foreign Shareholder is less than S$10.00, the Company shall be entitled to retain or deal with such net proceeds as the Directors may, in their absolute discretion, deem fit and no Foreign Shareholder shall have any claim whatsoever against the Company or CDP and their respective officers in connection therewith. Where such provisional allotments of Rights Shares are sold nil-paid on the SGX-ST, they will be sold at such price or prices as the Company may, in its absolute discretion, decide and no Foreign Shareholder shall have any claim whatsoever against the Company or CDP or their respective officers in respect of such sales or the proceeds thereof, the provisional allotments of Rights Shares or the Rights Shares represented by such provisional allotments. 3.8 Provisional Allotments. Entitled Shareholders will be at liberty to accept, decline, or otherwise renounce or trade their provisional allotments of the Rights Shares and will be eligible to apply for additional Rights Shares in excess of their provisional allotments under the Rights Issue. The Rights Shares represented by the provisional allotments of (i) Entitled Shareholders who decline, do not accept, or elect not to renounce or trade their provisional allotment of Rights Shares under the Rights Issue (during the provisional allotment trading period prescribed by the SGX-ST) and/or (ii) ineligible Shareholders may be issued to satisfy excess Rights Shares applications or otherwise dealt with in such manner as the 4
Directors may, in their absolute discretion, deem fit for the benefit of the Company. Fractional entitlements to the Rights Shares will be disregarded in arriving at the Shareholders entitlements and will, together with the provisional allotments which are not taken up for any reason, be aggregated and used to satisfy excess applications (if any), or disposed of or otherwise dealt with in such manner as the Directors may, in their absolute discretion, deem fit for the benefit of the Company. In the allotment of excess Rights Shares, preference will be given to the rounding of odd lots, followed by the allotment to Shareholders who are neither Directors nor substantial Shareholders. Directors and substantial Shareholders (including KLL, Keppel Corporation Limited and Temasek Holdings (Private) Limited) will rank last in priority. 3.9 Offer Information Statement. The terms and conditions of the Rights Issue may be subject to such changes as the Directors may deem fit. The final terms and conditions of the Rights Issue will be contained in the OIS to be despatched by the Company to Entitled Shareholders in due course. 3.10 Ranking. The Rights Shares are payable in full upon acceptance and/or application and will, upon allotment and issue, rank pari passu in all respects with the then existing issued Shares, save for any rights, allotments or other dividends, the record date for which falls before the date of issue of the Rights Shares. 3.11 Non-Underwritten Rights Issue. The Rights Issue will not be underwritten. Please note that KLL has given Irrevocable Undertakings to the Company (details of which are set out in Section 4 below) in respect of the Rights Issue. 3.12 Manager. The Company will not appoint a manager for the Rights Issue. 4. IRREVOCABLE UNDERTAKINGS To demonstrate its commitment to the Company, KLL, which has a direct interest in 362,484,579 Shares representing approximately 71.37% of the existing issued share capital of the Company as at the date of this Announcement, had on 30 May 2008, irrevocably undertaken to, inter alia: (i) (ii) directly and/or through one or more of its wholly-owned subsidiaries, subscribe and pay in full for the full entitlement of KLL of new Shares to be issued pursuant to the Rights Issue in accordance with the terms and conditions of the Rights Issue, no later than the latest time and date for acceptance of and/or excess application and payment for the Rights Shares under the Rights Issue (the Closing Date ); directly and/or through one or more of its wholly-owned subsidiaries, make, to the extent permitted by the SGX-ST, The Central Depository (Pte) Limited, any other relevant authority and applicable law, excess application(s) for and/or procure that excess application(s) will be made for any Rights Shares not subscribed for 5
at the Closing Date and after satisfaction of all application(s) and excess application(s) (if any) for the Rights Shares; and (iii) vote (in respect of all the Shares that it has a direct interest in) in favour of the resolution to approve the Rights Issue at the EGM (collectively, the Irrevocable Undertakings ). The Irrevocable Undertakings will ensure that all the Rights Shares will be fully taken up and subscribed, thereby removing the need for underwriting by external banks or financial institutions. The Irrevocable Undertakings will enhance the objective of a successful Rights Issue. The Irrevocable Undertakings as set out above are subject to and conditional upon the following: (a) (b) (c) the approval of the Shareholders at the EGM being obtained for the Rights Issue; the lodgment of the OIS in relation to the Rights Issue, together with all other accompanying documents (if applicable) by the Company with the Monetary Authority of Singapore ( MAS ); and the approval in-principle having been granted by the SGX-ST (and such approval not having been withdrawn or revoked on or prior to the completion of the Rights Issue) for the listing and quotation of the Rights Shares on the SGX-ST and, if such approval is granted subject to conditions, such conditions being acceptable to the Company. 5. PROPOSED CAPITAL REDUCTION EXERCISE 5.1 Details of the Capital Reduction Exercise. The Directors propose to undertake the Capital Reduction Exercise pursuant to Section 78C of the Companies Act. The Capital Reduction Exercise will be effected in the following manner: (a) (b) reducing the issued share capital of the Company by S$36,522,531.85 by cancelling the issued share capital of the Company which has been lost or is unrepresented by available assets to the extent of S$36,522,531.85 without any cancellation of Shares; and an amount equal to S$36,522,531.85, being the credit arising from the cancellation of the issued share capital of the Company, will be applied to writeoff the Accumulated Losses in their entirety. 6
It is a requirement under the Companies Act that a company proposing to undertake a capital reduction exercise should, inter alia, obtain the approval of its shareholders at a general meeting by way of a special resolution (the Capital Reduction Resolution ). 5.2 Effect on the Share Capital of the Company. The Capital Reduction Exercise will reduce the Accumulated Losses in their entirety in the amount of S$36,522,531.85. The Capital Reduction Exercise will not involve the diminution of any liability in respect of unpaid capital or the payment to any Shareholder of any issued share capital of the Company. There will be no change in the number of issued Shares in the capital of the Company held by Shareholders or the amount of Shareholders funds immediately after the Capital Reduction Exercise. 5.3 Rationale for the Capital Reduction. The Accumulated Losses arose mainly due to: (i) (ii) (iii) impairment in the value of investment in subsidiaries and associated companies as well as the impairment in the value of an office building; other operating expenses, comprising mainly staff costs and Directors remuneration; and finance costs, comprising mainly interest on a mortgage loan on an office building which was disposed of in the financial year ended 31 December 2007. The purpose of the Capital Reduction Exercise is to write-off S$36,522,531.85 representing the Accumulated Losses in their entirety. This is to better reflect the financial position and share capital of the Company as well as cancel or reduce any issued share capital which has been lost or is unrepresented by available assets, as the case may be. 5.4 Effective Date of Capital Reduction Exercise. After Shareholders approval has been obtained for the Capital Reduction Exercise at the EGM, the Company will send a notice to the Comptroller of Income Tax stating that the Capital Reduction Resolution for the Capital Reduction Exercise has been duly passed at the EGM. If no application has been received from creditors for the cancellation of the Capital Reduction Resolution within six weeks commencing from the date of the Capital Reduction Resolution, the Company will lodge the relevant documents with the Accounting and Corporate Regulatory Authority of Singapore ( ACRA ), upon which the Capital Reduction Exercise will take effect. The Company will then publicly announce and notify Shareholders of the effective date of the Capital Reduction Exercise through a SGXNET announcement, through the SGX-ST website: http://www.sgx.com. 7
6. APPROVALS 6.1 Rights Issue. The Rights Issue is subject to, inter alia, the following: (a) (b) (c) (d) (e) the in-principle approval of the SGX-ST for the listing and quotation of the Rights Shares on the Official List of the Main Board of the SGX-ST; the approval of Shareholders in connection with the Rights Issue at the EGM; the lodgment of the OIS with the MAS; prevailing market conditions at the relevant time; and the fixing of the Issue Price. An application will be made by the Company to obtain the in-principle approval of the SGX-ST for the listing and quotation of the Rights Shares on the Official List of the SGX- ST. The issue and despatch of the circular to Shareholders containing, inter alia, the notice of the EGM and details of the Rights Issue and the Capital Reduction Exercise are subject to the receipt of such approval from the SGX-ST. An appropriate announcement on the outcome of the application will be made in due course via SGXNET. Subject to the fulfillment of the conditions set out in paragraphs 6.1(a), (b) and (e) above, and the Company deciding to proceed with the Rights Issue having regard to prevailing market conditions, the OIS will be lodged with the MAS and despatched to Entitled Shareholders. 6.2 Capital Reduction Exercise. The Capital Reduction Exercise is subject to, inter alia, the following: (a) (b) (c) the approval of Shareholders in connection with the Capital Reduction Exercise by way of the Capital Reduction Resolution passed at the EGM; no application having been made for the cancellation of the Capital Reduction Resolution by any creditor of the Company within six weeks commencing from the date of the Capital Reduction Resolution, as prescribed in the Companies Act, or if such application was made, the dismissal thereof by the High Court of Singapore; and lodgment of the relevant documents with ACRA after the end of six weeks, but before the end of eight weeks, commencing from the date of the Capital Reduction Resolution. By Order Of The Board Tan San-Ju Company Secretary 30 May 2008 8