JUBILEE INDUSTRIES HOLDINGS LTD. (Company Registration No.200904797H) (Incorporated in the Republic of Singapore) LOAN AGREEMENTS Unless otherwise specified herein or where the context otherwise requires, capitalized terms used in this announcement shall have the same meaning as used in the Convertible Loan Agreement and Direct Loan Agreement entered between the Company and the Lender dated 7 October 2016. 1. Introduction The Board of Directors ( the Board ) of Jubilee Industries Holdings Ltd. (the Company ) wishes to announce that the Company had entered into an agreement (the Convertible Loan Agreement ) with WE Holdings Ltd. (the Lender ) on 7 October 2016, whereby the Lender has to date extended to the Company a total loan amount of up to US$16,000,000.00 (the Loans ) whereby US$8,000,000.00 (the Convertible Loan ) is convertible into such number of new ordinary shares in the capital of the Company (the Conversion ) on the terms and subject to the conditions of the Convertible Loan Agreement whilst the other US$8,000,000.00 (the Direct Loan ) was extended to the Company on the terms and subject to the conditions of the Direct Loan Agreement (the Direct Loan Agreement ). The Company has granted the Lender a right for the Lender to convert the Convertible Loan, in whole or in part, at the option of the Lender into Conversion based on one hundred and twenty percent (120%) of the volume weighted average price quoted by the SGX-ST for 30 consecutive trading days ending on the trading day immediately preceding the date of the Convertible Loan Agreement ( Conversion Price ), and on the terms and subject to the conditions of the said Agreement. Similarly, the Lender has granted the Company an option to make repayments of principal and payments of interest of the Direct Loan by way of a transfer of ordinary shares held by the Company in EG Industries Berhad (Company No. 222897-W) ( EG ) (subject to the Lender s approval) based on the volume weighted average price quoted by Bursa Malaysia Securities Berhad for thirty (30) consecutive trading days ending on the trading day immediately preceding the date of the payment ( Transfer Price ) and on the terms and subject to the conditions of the Direct Loan Agreement. 2. Application for Listing and Quotation An application will be made to the SGX-ST in due course for the Conversion to be admitted to Catalist and be listed for quotation on the Singapore Exchange Securities Trading Limited (the SGX-ST ). The Listing and Quotation Notice, if given, shall not be construed as an indication of the merits of the Company s shares, the Convertible Loan, the Conversion
or the Company. 3. Deed of Assignment of Debt between WE Components Pte Ltd, the Lender and the Company In addition to the Convertible Loan Agreement and Direct Loan Agreement entered into between the Company and the Lender, the Company has also entered into a Deed of Assignment of Debt with WE Components Pte. Ltd. ( WE Components ) and the Lender whereby WE Components assigned to the Company its debt owed to the Lender. Pursuant to such assignment of the debt from WE Components to the Company, the obligation to repay the assigned debt shall be borne by the Company. 4. Interested Person Transaction ( IPT ) The Lender is a company listed on the Singapore Exchange and was principally engaged in the business of distributing and manufacturing a comprehensive range of electronics components, systems and equipment for a growing number of international brands. They are currently in the business of commodities. WE Components was a wholly owned subsidiary of the Lender prior to its acquisition by the Company on 18 July 2014; details of which are contained in the Company s announcements dated 18 July and 8 October 2014. As mentioned in paragraph 1 above, the Lender has to date extended a total loan amount of up to US$16,000,000.00 to the Company. Of the US$16,000,000.00 extended, approximately US$10,000,000.00 had been disbursed prior to the acquisition of WE Components by the Company, while US$6,000,000.00 was disbursed after the acquisition. The Loans have been structured such that out of the US$10,000,000.00 disbursed prior to the acquisition of WE Components by the Company, US$8,000,000.00 was disbursed by way of the Direct Loan, whereas the remaining US$2,000,000.00 was disbursed as part of the Convertible Loan. The remaining US$6,000,000.00 is subject to the terms and conditions of the Convertible Loan Agreement. As of the date of this announcement, the Lender, together with its Independent Director Mr Ng Li Yong as at the date hereof, hold approximately 29.30% of the issued and paid up share capital (excluding the treasury shares) in the Company and is the controlling shareholder of the Company. Entries by the Company into various transactions with the Lender may be subject to Chapter 9 of the Listing Manual of the Singapore Exchange Securities Trading Limited ( Listing Manual ). Based on the Company s FY2016 financial results released on 30 May 2016, the Company is currently leasing a property from the Lender. The value of the transaction was S$480,000.00, which is the rental charged to the Company as of the aforementioned date and is less than 3% of the Group s NTA. The Company was not required to make an immediate announcement under Rule 905. The Company does not have a general mandate from its shareholders for IPTs. Under Rule 909, the value of a transaction in the case of borrowing of funds from an interested person is the interest payable on the borrowing. The accrued interest payable under the Direct Loan Agreement has a value of US$1,200,000, which is an IPT of more than 5% of the Companys and its subsidiaries (the Group ) net tangible assets ( NTA ) based on the most recently completed financial year. As such, the Company is making this announcement on the IPT pursuant to Rule 905 of the Listing Manual and the IPT is subject to shareholder approval
at an extraordinary general meeting ( EGM ) of the Company to be convened. As the Convertible Loan was partially disbursed to WE Components subsequent to the acquisition of WE Components by the Company, the Convertible Loan is also an IPT. Based on Rule 909 of the Listing Manual, the value of this IPT is approximately US$480,000, being the accrued interest of the Convertible Loan. When compared against the Group s latest audited NTA as at 31 March 2016 which was approximately US$18,911,000, this IPT amounts to less than 3% of the Group s latest audited NTA. The Company is not ordinarily required to make an announcement of this IPT. However, as the three transactions mentioned above have been entered into between the Lender and the Company in the same financial year, the Company must disclose the aggregate value of IPTs entered into during the same under Rule 907. Accordingly, the thresholds in Rules 905 and 906 would apply. The possible aggregated values of the IPTs are tabled below : Individual Transactions No conversion into Company s shares Value (USD) Full conversion into Company s shares Rental 480,000 480,000 Direct Loan Agreement 1,200,000 1,200,000 Convertible Agreement Loan 480,000 8,480,000 Aggregated Value of IPT 2,160,000 10,160,000 The aggregated value of the IPT has exceeded 5% of the Group's latest audited NTA, regardless of whether the Convertible Loan is converted or not. Accordingly, the Company is making an announcement on the IPT and the IPT is subject to shareholder approval at an EGM of the Company to be convened. Further and separately, as mentioned in paragraph 1 above, the Lender has granted an option to the Company to make repayments of the Direct Loan by way of a transfer of ordinary shares held by the Company in EG subject to the terms of the Direct Loan Agreement. For illustration purposes only, and on the assumption that the date of payment is of even date, in the event the Company exercises this option upon the Lender s approval thereof, the aforementioned transfer of 24,972,616 ordinary shares priced at RM 0.86 in EG (based on the weighted average price quoted by Bursa Malaysia Securities Berhad for thirty (30) consecutive trading days ending on the trading day immediately preceding the date of this announcement) would constitute an IPT having a value of RM 21,476,449.76, being more than 5% of the Group s NTA based on the most recently completed financial year. Similarly, the transaction will be subject to shareholder approval at an EGM of the Company to be convened. A circular setting out, amongst other things, the details of, and other relevant information pertaining to the IPTs together with the notice of the EGM, will be despatched to the Shareholders in due course. 5. Principal Terms of the Convertible Loan Agreement
The principal terms of the Convertible Loan Agreement are as follows:- (a) Drawdown: As at the date of this Convertible Loan Agreement, the full amount of the Convertible Loan has been disbursed to the Company. (b) Purpose: The Convertible Loan shall be applied solely towards the working capital requirements and purposes of the Company. (c) Term of the Loan: The term of the Convertible Loan is for a period of three (3) years. (d) Interest: The Convertible Loan shall bear interest at the rate of two per cent (2%) per annum (calculated on the basis of a year of 365 days and actual number of days lapsed) from the respective dates of disbursement of the Convertible Loan payable at the end of the Term of the Convertible Loan if the Convertible Loan is not converted. (e) Repayment of Loan: The Company shall on Repayment Notice by the Lender, repay on the Repayment Date i.e. the date falling seven (7) Business Days from the date of the Repayment Notice or any other date as determined by the Lender, to the Lender or as the Lender may direct, the full amount of the Loan and all interests which have accrued thereon which remains unpaid. (f) Prepayment of Loan: The Company may not prepay the Convertible Loan without the prior written consent of the Lender, which consent may be given subject to such terms and on such conditions as the Lender in its absolute discretion deems fit. (g) Conversion Right: Subject to the Listing and Quotation Notice being obtained by the Company, the Convertible Loan or any part thereof including all accrued interest may be converted by the Lender from time to time into Conversion at a Conversion Price based on one hundred and twenty percent (120%) of the volume weighted average price quoted by the SGX-ST for 30 consecutive trading days ending on the trading day immediately preceding the date of the Convertible Loan Agreement. In the event the Lender chooses to convert the Convertible Loan partially, the Company shall allot and issue such relevant number of Conversion based on the same share price. For the avoidance of doubt, the Lender shall have the right to convert the Convertible Loan at any time before the expiry of the Term by the serving a Conversion Notice to the Company. (h) Status of the Conversion : The Conversion, when issued, shall be free from all claims, charges, liens and other encumbrances whatsoever and shall rank, pari passu, in all respects with the existing ordinary shares of the Company. (i) Governing Law: The terms of the Convertible Loan Agreement shall be governed by and construed in accordance with the laws of Singapore. 6. Principal Terms of the Direct Loan Agreement The principal terms of the Direct Loan Agreement are as follows:- (a) Drawdown: As at the date of this Direct Loan Agreement, the full amount of the Direct Loan has been disbursed to the Company.
(b) Purpose: The Direct Loan shall be applied solely towards the working capital requirements and purposes of the Company. (c) Term of the Loan: The term of the Direct Loan is for a period of three (3) years. (d) Interest: The Direct Loan shall bear interest at the rate of five per cent (5%) per annum (calculated on the basis of a year of 365 days and actual number of days lapsed) from the respective dates of disbursement of the Direct Loan payable at the end of the Term of the Direct Loan. (e) Repayment of Loan: The Company shall repay the Lender the Direct Loan and interest thereon amounting in aggregate to US$9,200,000 on the date falling 36 months from the date of the Direct Loan Agreement PROVIDED ALWAYS and without prejudice to the Lender s rights upon the occurrence of any Event of Default such that the Lender shall have the right on first written demand to require repayment of the Direct Loan and all interest accruing thereon, at any time after the date falling 3 months from the date of the Direct Loan Agreement. (f) Prepayment of Loan: The Company may prepay the whole or any part of the Direct Loan before the Repayment Date upon the prior written consent of the Lender unless otherwise expressly provided in the Direct Loan Agreement. (g) Payment Provisions: Unless otherwise provided in the Direct Loan Agreement, all repayments of principal and payments of interest and all other sums due from the Company under this Agreement shall be made available by the Company (i) first in Dollars for value, then (ii) by way of transfer of ordinary shares held by the Company in EG Industries Berhad (Company No. 222897-W) ( EG ). In the event the Company makes repayments of principal and payments of interest by way of a transfer of ordinary shares held by the Company in EG, and subject to the Lender s approval of the same, the value of the aforementioned transfer shall be determined based on the weighted average price quoted by Bursa Malaysia Securities Berhad for thirty (30) consecutive trading days ending on the trading day immediately preceding the date of payment. The Company shall make payment of any shortfall in Dollars for value or in immediately available funds. For the avoidance of doubt, the Company shall use all reasonable endeavours to procure that the Loan be first repaid by way of cash payments before electing the aforementioned share transfer. (h) Governing Law: The terms of the Direct Loan Agreement shall be governed by and construed in accordance with the laws of Singapore. (i) (j) Event of Default: In the event of default, the Lender shall be entitled to declare the occurrence of an Event of Default by notice in writing to the Company whereupon the Total Indebtedness shall become immediately due and payable without any demand or notice which is hereby expressly waived, the Lender shall be entitled to apply any credit balance outstanding in any account of the Company with the Lender and in whatever currency towards satisfaction of the Total Indebtedness, and the Lender s commitments in relation to the Loan shall automatically be cancelled and forthwith cease. Amendments, Waivers and Consents: Any provision of the Direct Loan Agreement may be amended only if the Company and the Lender so agree in writing and any Event of Default or Potential Event of Default may be waived before or after it occurs only if the Lender so agrees in writing.
7. Conditions Precedent of the Convertible Loan Agreement The obligations of the Lender to make available the Convertible Loan to the Company are subject to the fulfillment of the Conditions Precedent including, but not limited to, the following: (a) both the Company and the Lender obtaining approval from their respective shareholders in general meeting to enter into the Convertible Loan Agreement; (b) the Lender to obtain an exemption (known as a Whitewash Waiver ) from the Securities Industry Council of Singapore ( SIC ) to not make a Mandatory Take-over Offer to the Company under Rule 14 of the Singapore Code of Take-overs and Mergers issued by the Monetary Authority of Singapore (the Code ) upon the conversion, if any. As Conversion will result in the Lender holding more than 30% of the Company s issued and paid up share capital, the Conversion will trigger a Mandatory Take-over Offer from the Lender for all of the Company s shares under Rule 14 of the Code. The whitewash waiver will have to be obtained such that the Lender shall not be obligated under Rule 14 of the Code to make a Mandatory Take-over Offer for all of the Company s shares; (c) the execution of a Deed of Assignment of Debt between WE Components, the Lender and the Company whereby WE Components assigns to the Company its debt of US$16,000,000 owed to the Lender; (d) that all acts, conditions and things required to be done and performed and to have happened precedent to the execution and delivery of the Convertible Loan Agreement and to constitute the same legal, valid and binding obligations enforceable in accordance with its respective terms, shall have been done and performed and have happened in due and strict compliance with all applicable laws; and (e) that no Event of Default or Potential Event of Default has occurred on or before the date of this Convertible Loan Agreement. In the event that any of the above conditions is not satisfied or fulfilled within 5 months from the date of this Convertible Loan Agreement (or such extension to be mutually agreed by the Parties), A) if the non-satisfaction or non-fulfilment of any of the above conditions is due to the Company, the Company shall immediately repay the Loan with accrued interest of 5% per annum commencing from the date of this Convertible Loan Agreement to the Lender; or B) if the non-satisfaction or non-fulfilment of any of the above conditions is due to the Lender, the Parties shall discuss in good faith on the repayment of the Loan plus accrued interest. Upon the satisfaction or fulfillment of the above conditions, this Convertible Loan Agreement shall take effect on the date of this Convertible Loan Agreement. 8. Rationale for the Loans The Company is of the view that the Convertible Loan Agreement and the Direct Loan Agreement are beneficial to the Group as it would enable the Group to continue its operations with minimal restrictions as the Loan shall be used towards working capital to support the components business of WE Components. The Loans would further enable the Group to pursue full and final settlement of the Company s
obligation due to the Lender. For the avoidance of doubt, this obligation includes part of the US$16,000,000 Debt owed by WE Components to the Lender which has been assigned by WE Components to the Company whereby the obligation to repay the assigned debt shall be borne by the Company. The Loans were obtained from the Lender (who is a controlling shareholder) in light of present market conditions which renders obtaining of banking facilities difficult, more so for companies with similar financial performance as the Group. Consequently, there are minimal banking facilities options available to the Company. The working capital available to the Company to meet its present requirement is mainly cash and with the present bank facilities and Loan from the Lender, the working capital available to the Company is sufficient to meet its present requirements. Lastly, the Conversion are to be issued to the Lender who is the controlling shareholder of the Company to consolidate control of the Company in order to allow the Company to achieve its full potential in the electronic components business. 9. Whitewash Resolution Under Rule 14.1 of the Singapore Code on Take-overs and Mergers ( Take-over Code ), exceptwith the SIC s consent, any person who: (a) acquires, whether by a series of transactions over a period of time or not, shares which (taken together with shares held by or acquired by persons acting in concert with him) carry 30% or more of the voting rights of a company; or (b) together with persons acting in concert with him, holds not less than 30% but more than 50% of the voting rights and such person, or persons acting in concert with him, acquires in any period of 6 months additional shares carrying more than 1% of the voting rights of a company, is required to make a mandatory general offer for all the shares in the company which he does not already own or control. As mentioned above, as at the date hereof, the Lender together with its Independent Director Mr Ng Li Yong holds approximately 29.30% 1 of the issued and paid up share capital (excluding the treasury shares) in the Company, the Lender may, on the assumption that 354,019,073 shares has been issued and allotted to the Lender and its concert parties being its Directors which comprise of Executive Chairman and Managing Director Mr Terence Tea and its Independent Director Mr Ng Li Yong, acquire up to approximately 65.74% 2 of the enlarged issued and paid up share capital of the Company upon the exercise of the right under the Convertible Loan Agreement and accordingly, the Lender and its concert parties may be required under Rule 14 of the Take-over Code to make a mandatory general offer for the shares not already owned or controlled by it, unless such obligation is waived by the SIC on such terms and conditions it may impose i.e. Whitewash Waiver. 1 The Lender currently holds 97,354,000 shares in the Company and Mr Ng Li Yong holds 170,500 ordinary shares in the Company. 2 The Lender may potentially hold 451,373,573 shares in the Company upon the conversion while the number of shares held by Independent Director Mr Ng Li Yong remains unchanged.
10. Authority for the issue of the Conversion The issuance of the Conversion to the Lender: (a) (b) (c) constitutes an issuance of shares to a person under Rule 812, specifically Rule 812(1)(d) being the issuance of shares to a corporation in whose shares the Company s Non-Executive Chairman, Mr Terence Tea holds an aggregate interest of 19.47% and therefore specific shareholder approval is also sought on this ground besides the fact that the transaction is an Interested Person Transaction; could result in the Lender and its concert parties incurring a mandatory general offer obligation thereby requiring the approval of the independent shareholders to waive their rights to receive a general offer from the Lender and its concert parties; would result in the Company becoming a subsidiary of the Lender by the acquisition of over 50% of the enlarged issued share capital of the Company by the Lender and its concert parties. 11. Effect of the Issuance of the Conversion on the Shareholding of the Company Total Issued share capital of the Company Mr Ng Li Yong WE Holdings Designation/ Category Independent Director Controlling Shareholder SHAREHOLDING (JUBILEE) held prior to the conversion of the Convertible Loan and issue of the Conversion (No. / (%)) held after the conversion of the Convertible Loan and issue of the Conversion (No. / (%)) 332,823,469 686,842,542 170,500 (0.05%) 170,500 (0.02%) 97,354,500 (29.25%) 451,373,573 (65.72%) 12. Financial Effects of the Loans Convertible Loan It is not possible to determine precisely the financial effects the Convertible Loan would have on the Company until the Convertible Loan has been fully converted or repaid. However, solely for the purposes of illustration only, the Company has set out the financial effects of the Convertible Loan and the Conversion on the Company s share capital, earnings per share, net tangible assets per share and gearing, based on the latest audited consolidated financial statements of the Company for its most recently completed financial year ended 31 March 2016 ( FY2016 ). The financial effects set out below are on the following bases and assumptions:
(a) the full conversion of the Convertible Loan into 354,019,073 Conversion at the Conversion Price; (b) the financial impact on the earnings per share is computed based on the assumption that the Convertible Loan was fully disbursed and was fully converted at the beginning of FY2016; and (c) the financial impact on the net tangible assets per share is computed based on the assumption that the Convertible Loan was fully disbursed and was fully converted at the end of FY2016. Share Capital Issued and paid-up share capital (S$ 000) Total Number of Issued FY2016 After conversion of the Convertible Loan and issue of the Conversion 48,196 59,666 332,823,469 686,842,542 Earnings per share Net profit for the period (S$ 000) FY2016 After conversion of the Convertible Loan and issue of the Conversion (22,224) (22,224) Weighted average number of issued share 344,150,144 345,117,410 Earning per share (S$ cents) (6.46) (6.44) Net Tangible Assets ( NTA ) per share
FY2016 After conversion of the Convertible Loan and issue of the Conversion NTA (S$ 000) 18,911 18,911 NTA per share (S$ cents) 5.49 5.48 Gearing FY2016 After conversion of the Convertible Loan and issue of the Conversion Total Borrowings (S$ 000) 320 320 Shareholders Funds (S$ 000) 19,257 19,257 Gearing Ratio 1.66 1.66 Direct Loan Separately, as the Direct Loan has already been disbursed to WEC prior to its acquisition by the Company, there are no financial effects of the Direct Loan on the Group. 13. Interests of Directors and Substantial Shareholders Terence is the Executive Chairman, Managing Director and CEO of the Lender and holds 19.47% shareholding interest in the Lender and is a concert party of the Lender. The Lender and its concert parties being its Directors Mr. Terence Tea and Mr. Ng Li Yong would abstain from voting in the EGM held. As the Convertible Loan Agreement is an Interested Person Transaction involving (i) the conversion of up to US$8,480,000 owed to the Lender (including interest) pursuant to the Deed of Assignment between WE Components, the Lender and the Company (ii) the issuance of a large block of shares to the Lender i.e. 354,019,073 if the Loan is fully converted resulting in the Lender together with its concert parties acquiring up to approximately 65.74% of the enlarged issued and paid up share capital of the Company thereby incurring a mandatory general offer obligation and having to obtain a Whitewash Waiver from the SIC and (iii) the interest of Mr Terence Tea the Non-Executive Chairman of the Company in the Interested
Person Transaction by virtue of being the Executive Chairman, Managing Director and CEO of the Lender and holding a 19.47% shareholding interest in the Lender and also being a concert party, the circular to Shareholders would include an opinion from an Independent Financial Adviser ( IFA ) on whether the Interested Person Transaction is on normal commercial terms and is not prejudicial to the interests of the Company and independent shareholders. Further the Company would be appointing an IFA in due course to advise the Independent Directors of the Company in respect of the Interested Person Transaction. The IFA shall also provide an opinion on the IPT in relation to the repayment of the direct loan and interests by way of transfer of shares in EG Industries Berhad to the Borrower, WE Holdings. The Audit Committee would form its view as to whether the Interested Person Transaction is on normal commercial terms and is not prejudicial to the interest of the Company and its minority shareholder after considering the IFA Opinion ( AC Opinion). The AC Opinion will be set out in the Circular. The Company intends to convene the EGM to seek Shareholders approval on the Interested Person Transaction and that the Circular containing the notice of the EGM and the details of the Interested Person Transaction will be despatched to Shareholders in due course. To the best of the Directors knowledge, none of the Directors and controlling shareholders has any interest, direct or indirect, in the Direct Loan Agreement. 14. Documents Available For Inspection A copy of the Convertible Loan Agreement, Direct Loan Agreement and Deed of Assignment of Debt is available for inspection during normal business hours from 9.00 a.m. to 5.00 p.m. at the Company s registered office at 10 Ubi Crescent, Ubi Techpark Lobby E, #03-94-96, Singapore 408564 for three (3) months from the date of this announcement. 15. 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 Convertible Loan Agreement, Direct Loan Agreement, the Interested Person Transaction and the Whitewash Resolution, the Company and its subsidiaries, and the Directors are not aware of any facts, the omission of which would make any statement in this announcement misleading. Where information in this announcement has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this announcement in its proper form and context. For and On Behalf of the Board Terence Tea Yeok Kian Non-Executive Chairman 7 October 2016
This announcement has been reviewed by the Company's Sponsor, RHT Capital Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (SGX-ST). The Company's 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:- Name: Mr. Tan Chong Huat, Registered Professional, RHT Capital Pte. Ltd. Address: Six Battery Road #10-01, Singapore 049909 Tel: 6381 6757