RICHLAND GROUP LIMITED (Company Registration No.: 200301668R) (Incorporated in Singapore) MANDATORY UNCONDITIONAL GENERAL CASH OFFER BY REDMOUNT HOLDINGS LIMITED FOR ALL THE ISSUED AND PAID UP ORDINARY SHARES IN THE CAPITAL OF RICHLAND GROUP LIMITED PUT OPTION AGREEMENT BETWEEN THE COMPANY AND THE PURCHASERS (as defined below) MANDATORY UNCONDITIONAL GENERAL CASH OFFER BY REDMOUNT HOLDINGS LIMITED FOR ALL THE ISSUED AND PAID UP ORDINARY SHARES IN THE CAPITAL OF RICHLAND GROUP LIMITED The Board of Directors ( Board ) of RichLand Group Limited ("Company") wishes to announce that CIMB-GK Securities Pte. Ltd ( CIMB-GK ), has on 30 May 2008 issued, for and on behalf of Redmount Holdings Limited ( Offeror ), an announcement ( Offer Announcement ) of the Offeror s intention to make a mandatory unconditional general cash offer ( Offer ) for all the issued and paid-up ordinary shares ( Offer Shares ) in the capital of the Company, other than those already owned, controlled or agreed to be acquired by the Offeror or parties acting or deemed to acting in concert with it ( Concert Parties ). The Offer As set out in the Offer Announcement, the Offer will be made inter-alia on the following terms: Unconditional Offer. The Offer will be unconditional in all respects. Terms. The Offer will be made on the following basis: For each Offer Share: 33.8 Singapore cents in cash ( Offer Price ). The Offer Shares will be acquired (a) fully paid, (b) free from any mortgage, debenture, lien, charge, pledge, title retention, right to acquire, security interest, option, pre-emptive or similar right, right of first refusal and any other encumbrance or condition whatsoever and (c) together with all rights, benefits and entitlements attached thereto as at 3 March 2008 and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) declared, paid or made by the Company on or after 3 March 2008, other than the special dividend of 0.78 Singapore cents and the final dividend of 0.5 Singapore cents in respect of the Company s financial year ended 31 December 2007 which was paid by the Company on 15 May 2008. The Offer is subject to the terms and conditions set out in the Offer Announcement. For further details, please refer to a copy of the Offer Announcement which is available on the website of the Singapore Exchange Securities Trading Limited at www.sgx.com. Page 1
Offer Document According to the Offer Announcement, an offer document setting out the terms and conditions of the Offer ( Offer Document ) and enclosing the appropriate form(s) of acceptance of the Offer, will be despatched to the holders of the Offer Shares not earlier than 14 days and not later than 21 days from the date of the Offer Announcement. Independent Financial Adviser For the purposes of the Offer, the Board will appoint an independent financial adviser to the directors of the Company who are considered independent for the purposes of the Offer ( Independent Directors ). A circular containing the advice of the independent financial adviser and the recommendations of the Independent Directors on the Offer will be sent to Shareholders within 14 days of the posting of the Offer Document to be issued by and on behalf of the Offeror. In the meantime, Shareholders are advised to refrain from taking any action in relation to their Shares which may be prejudicial to their interests until they or their advisers have considered the Full Year Results Announcement of the Company and the information and the recommendations of the Independent Directors, as well as the advice of the independent financial adviser set out in the circular to be issued in due course. PUT OPTION AGREEMENT BETWEEN THE COMPANY AND THE PURCHASERS (as defined below) The Company has entered into a conditional put option agreement dated 30 May 2008 ( Put Option Agreement ) with Lim Chwee Kim, Lim Chwee Poh, Allen Joseph Pathmarajah, Tan Yew Khuan, Yap Chin Guan and Goh Ah Koi (collectively referred to as Purchasers ), whereby the Purchasers, have in consideration of S$1.00 payable in cash by the Company, granted, subject to certain conditions (including the approval of the Company s shareholders) the Company a put option ( Put Option ) over the entire issued and paid-up share capital ( Option Shares ) of its wholly owned subsidiary, RichLand Logistics Services Pte Ltd ( RichLand Logistics ) as at the Completion Date (as defined below). Each Purchaser agreed to purchase and the Company has the right, but not the obligation to require the Purchasers to purchase, the Option Shares, in the respective proportions set out against each Purchaser s name in the Put Option Agreement, free from encumbrances and with all rights attaching thereto on the Exercise Date, on and upon the terms and subject to the conditions set out in the Put Option Agreement Key Terms of the Put Option Agreement (i) Under the Put Option Agreement, the exercise date ( Exercise Date ) of the Put Option is 31 March 2009 but if the audited accounts of the Company have not been issued as at 30 March 2009, the exercise date will be the last business day of the calendar month in which the said accounts are issued, or such other date as the Company and the Purchasers may agree in writing, but in no event be later than 30 April 2009. (ii) The aggregate purchase consideration payable by the Purchaser in respect of the Option Shares is S$13,000,000, less any dividends distributed by RichLand Logistics to Company in respect of the financial year ending 31 December 2008 ( Purchase Consideration ). The Purchase Consideration shall not be adjusted for the dividend announced by the Company in respect of financial year ended 31 December 2007. Page 2
(iii) The grant of the Put Option to the Company by the Purchaser and the obligation of the parties to complete the sale and purchase of the Option Shares under the Put Option Agreement is subject to the satisfaction or waiver pursuant to the Put Option Agreement by the Company or the Purchasers in whole or in part in its or their sole and absolute discretion, of inter-alia the following conditions precedent:- (a) all consents, approvals, authorisations or waivers, (where necessary) from any third party or any relevant authorities in Singapore or elsewhere (including but not limited to any governmental or regulatory authorities) in order to: i. enable the parties to lawfully enter into, exercise their respective rights and perform and comply with their respective obligations under the Put Option Agreement; and ii. ensure that those obligations are legally binding and enforceable; (b) (c) (d) closing of the Conditional Sale and Purchase Agreement dated 3 March 2008 between the Offeror and the Purchasers in accordance with the terms thereunder; approval of the shareholders of the Company for the grant and/or the exercise of the Put Option, if required under any applicable laws and regulations, including all approvals set out in Chapters 9 and 10 of the Listing Manual of the SGX-ST and the Take-over Code, being obtained; an independent financial adviser appointed by the Company to advise the independent directors of the Company in relation to the Put Option opining that the terms of the Put Option is on normal commercial terms and is not prejudicial to the interests of the Option Holder and its minority shareholders. (v) (vi) (vii) In the event that any of the conditions precedent are not fulfilled by the Purchasers or the Company, as the case may be, or waived by the non-defaulting Party in writing, on or before the Exercise Date, or such other date as the parties may mutually agree, the Put Option Agreement shall ipso facto lapse and cease to have further effect and no party shall have any claim against the other parties for costs, damages, compensation or otherwise save as expressly provided in the Put Option Agreement. The Put Option may be exercised by the Company once only on the Exercise Date in respect of all and not some only of the Option Shares only if the earnings before interest, taxes, depreciation and amortization of RichLand Logistics ( EBITDA ) as reflected in its audited financial statements for the financial year ended 31 December 2008 (which financial statements shall be prepared in accordance with accounting practices and policies of RichLand Logistics consistently applied), is less than S$2,200,000 ( Put Condition ). Completion of the sale of the Option Shares pursuant to the exercise of the Put Option shall, subject to the provisions of the Put Option Agreement, take place on the date falling 30 Business Days from the date of the notice by the Company when exercising the Put Option ( Completion Date ). Interested Person Transaction Lim Chwee Kim and Lim Chwee Poh are directors and controlling shareholders of the Company, holding interests of 66.5% of the total issued share capital of the Company, while Allen Joseph Pathmarajah and Tan Yew Khuan are directors of the Company and accordingly are interested persons for the purposes of Chapter 9 of the Listing Manual. The grant of the Put Option would constitute an interested person transaction within the meaning of Chapter 9 of the Listing Manual. Page 3
Under Chapter 9 of the Listing Manual, the grant of the Put Option is subject to shareholders approval as the aggregate value of the Put Option (assuming exercise by the Company of the Put Option) is S$13,000,000 representing approximately 61.04% of the audited net tangible assets ( NTA ) of the Group as at 31 December 2007. Save for this, and as previously announced in the Company s Annual Report 2007, the Company has not entered into any interested person transactions in the current financial year to date. Relative Figures Under Rule 1006 of the Listing Manual The relative figures relating to the exercise of the Put Option computed on the bases set out in Rule 1006(a) to (d) of the Listing Manual of the Singapore Exchange Securities Trading Limited ( SGX-ST ) ( Listing Manual ) are as follows: Relative figure computed in accordance with the bases set out in Rule 1006 Rule 1006(a) Rule 1006(b) Rule 1006(c) Rule 1006(d) The net asset value of the assets to be disposed of, compared with the group s net asset value. The net profits attributable to the assets disposed of, compared with the group s net profits. The aggregate value of the consideration given or received, compared with the issuer s market capitalization based on the total number of issued shares excluding treasury shares. The number of equity securities issued by the issuer as consideration for an acquisition, as compared with the number of equity securities previously in issue. 36.2% 90.2% 19.6% Not applicable to disposal of assets The relative percentages under Rule 1006(a) and (b) of the Listing Manual exceed 20%. The Put Option is thus currently classified as a major transaction for the purposes of Chapter 10 of the Listing Manual and the Company would need to seek the approval of its shareholders at an extraordinary general meeting to be convened. RichLand Logistics RichLand Logistic is the wholly owned subsidiary of the Company and is engaged in the business of provision of transportation management (including transportation of goods), airport cargo terminal handling and supply chain services. Page 4
Financial Effects The effect of the sale of the Option Shares on the net tangible assets ( NTA ) per share of the Group (as defined below) for financial year ended 2007, assuming that the sale of the Option Shares had been effected at the end of financial year ended 31 December 2007 is as follows: Group Financial Year 2007 After the sale of Option Shares NTA per share (S$) 16.67 20.83 The effect of the sale of the Option Shares on the earnings per share of Group (as defined below) for financial year ended 2007, assuming that the sale of the Option Shares had been effected at the beginning of financial year ended 31 December 2007 is as follows: Group Financial Year 2007 After the sale of Option Shares Earnings per share (S$) 1.75 2.77 Purchase Consideration and the Use of the Proceeds from the Put Option (i) (ii) (iii) The Purchase Consideration was arrived at on a willing buyer-willing seller basis. The current book value of RichLand Logistics in the consolidated financial statements of the Company and its subsidiary companies ( Group ) for the financial year ended 31 December 2007 is S$7.7 million. Assuming that the Put Option had been exercised today, the excess of the Purchase Consideration from the exercise of the Put Option over the book value of RichLand Logistics as of 31 December 2007 is approximately S$5.3 million The net proceeds (less estimated expenses of S$150,000) from the exercise of the Put Option would be approximately S$12.85 million. It is intended that the proceeds from the exercise of the Put Option be used for working capital purposes, repayment of bank and other borrowings incurred by the Group and/or to fund any future investments or acquisitions that the Group may undertake. Rationale The Put Option gives the Company the right, without the obligation, to dispose of its logistics business in the event that it turns out to be incompatible with the Company s new business in the oil and gas industry upon completion of the propose acquisition of 75% of the entire issued and paid up shares of Elnusa TriStar Ramba Limited and if the EBITDA of the logistics business falls below S$2.2 million. The said S$2.2 million EBITDA represents a threshold value below which it may not be commercially viable to carry on with the logistics business in its present form. The Put Option gives the Company the ability to divest the logistics business at a value which is acceptable to the Company, having regard to the potential new business direction of the Company. The Board is of the view that, taking into account all these considerations, the Put Option Agreement is in the best interests of the Company and its shareholders. Circular to Shareholders The Company will appoint an independent financial adviser under Rule 921(4) of the Listing Manual to advise the Board of the Company in relation to the Put Option and will despatch a circular containing the opinion of the independent financial adviser in relation to the Put Option together with a notice of an Extraordinary General Meeting in due course. Page 5
Interest of Directors and Controlling Shareholders Save as disclosed above, none of the Directors or controlling shareholders has any interest, direct or indirect, in the Put Option. Statement from Audit Committee The Audit Committee would be obtaining an opinion from the independent financial adviser before forming its view which will be announced subsequently. Documents for Inspection The Put Option Agreement dated 30 May 2008 is available for inspection during normal business hours at 11 Bedok North Avenue 4 #05-01 RichLand Business Centre for three (3) months from the date hereof. RESPONSIBILITY STATEMENT The Directors of the Company (including those who have delegated supervision of this Announcement) have taken all reasonable care to ensure that the facts stated in this Announcement are fair and accurate and that no material facts have been omitted from this Announcement, and they jointly and severally accept responsibility accordingly. Where any information has been extracted from the Offer Announcement or published or publicly available sources, the sole responsibility of the directors of the Company has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Announcement. BY ORDER OF THE BOARD Submitted by Lim Chwee Poh, Executive Director, on 30 May 2008 to the SGX. Page 6