21 March 2011 Chalmers Limited in respect of a renounceable pro-rata offer of New Shares at an issue price of $2.25 each on the basis of 1 New Share for every 3 Existing Shares held on the Record Date. This document is not a prospectus This document is not a prospectus and does not contain all the information that an investor would find in a prospectus or which may be required in order to make an informed investment decision regarding, or about the rights attaching to, the New Shares offered by this document. This document is important and requires your immediate attention This document should be read in its entirety. If you do not understand its contents or are in doubt about what to do, you should consult your stockbroker or a professional advisor without delay.
Important Information Applications Applications for New Shares by Eligible Shareholders can only be made on an original Entitlement and Acceptance Form sent with this. The Entitlement and Acceptance Form sets out an Eligible Shareholder's entitlement to participate in the Offer. Eligible Shareholders may only apply for their Entitlement either in part or in full. Information or representation No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer. Overseas shareholders No action has been taken to permit the offer of New Shares under this Offer in any jurisdiction other than Australia and New Zealand. The distribution of this in jurisdictions outside Australia and New Zealand may be restricted by law and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This does not constitute an offer of New Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this. Privacy The Company collects information about each Applicant provided in an Entitlement and Acceptance Form for the purposes of processing the Application and, if the Application is successful, administer the Applicant's security holding in the Company. By submitting an Entitlement and Acceptance Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Entitlement and Acceptance Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities. If you do not provide the information required on the Entitlement and Acceptance Form, the Company may not be able to accept or process your Application. An Applicant has the right to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company's registered office. Document not a prospectus This document is provided for information purposes only, and is not a prospectus or other disclosure document for the purposes of the Corporations Act. Accordingly, this does not necessarily contain all of the information that an investor would find in a prospectus or which may be required to make an informed investment decision regarding, or about the rights attaching to, the New Shares offered by this. It is important to note that, as the Company is a public company listed on the ASX, it is subject to the continuous disclosure requirements set out in Chapter 3 of the listing rules of the ASX. As such, investors should refer to the ASX announcements platform (which can be located at www.asx.com.au) for any announcements made by the Company, including announcements in respect of the offers contained in this, the Half Yearly Report (for the financial half year ended 31 December 2010), and the recent announcement regarding the trading performance for the 6 months ended 31 December 2010 and the effect of the recent floods in Queensland.
CHALMERS LIMITED ABN 34 004 471 032 HEAD OFFICE 20-28 Cawley Road, Yarraville, VIC. 3013 Australia Telephone: (03) 9316 2011 Facsimile: (03) 9316 2066 Postal Address: PO Box 50, Yarraville, VIC. 3013 21 March 2011 Dear Chalmers Shareholder Chairman's Letter Chalmers Limited (Chalmers) invites you to participate in a renounceable Rights Issue to raise up to $4.28 million (before expenses) through the issue of up to 1,903,500 New Shares in Chalmers. The Rights Issue offers you the right to take up 1 New Share for every 3 Existing Shares you hold as at 1 April 2011, at an issue price of $2.25 per share. This opportunity to increase your investment in Chalmers represents a discount on the market value of shares in the Company of approximately 27% (based on the last sale price of ordinary shares as at the close of market on 18 March 2011). The rights to New Shares under the Offer are renounceable. Accordingly, you may trade on ASX or otherwise privately transfer your rights to subscribe for New Shares under the Offer to any other party during the rights trading period commencing on 28 March 2011 and ending on 21 April 2011. If you take up your full Entitlement under the Rights Issue you will also have the opportunity to apply for Shortfall Shares that are not taken up by other Eligible Shareholders under the rights issue. These Shortfall Shares will be offered on the same terms and for the same issue price as the New Shares under the Rights Issue. The directors reserve the right to issue the Shortfall Shares at their discretion. The funds raised pursuant to the Offer will be used to reduce balance sheet gearing through the repayment of various borrowings, provide additional working capital, and allow scope for Chalmers to take up business opportunities as and when they arise. The details of the Offer are set out in the and your personalised Entitlement and Acceptance Form. Please read the in its entirety before making your decision to invest. A description of risk factors that you may wish to consider are set out in Section 2. If you wish to accept your Entitlement, your application for New Shares must be made on the Entitlement and Acceptance Form by 2 May 2011. If you do not wish to accept any of your Entitlement, you are not obliged to do anything, the number of Shares you hold and the rights attached to those Shares will not be affected. However, your percentage shareholding in Chalmers will be diluted. On behalf of the Board, I thank you for your ongoing support as a Shareholder in Chalmers. Yours sincerely Colin Stubbs Depots Melbourne Cnr. Hardie Road & Francis Street, Brooklyn, VIC. 3025 Telephone: (03) 9314 1244 Facsimile: (03) 9314 2686 Brisbane Whimbrel Street, Port of Brisbane, QLD. 4178 Telephone: (07) 3896 6030 Facsimile: (07) 3895 6001
Key Offer Statistics Offer Price per Share Discount (based on the last sale price of ordinary shares as at the close of market on 18 March 2011) Entitlement under the Offer Maximum amount which may be raised under the Offer $2.25 27% 1 New Share for every 3 Existing Shares held $4,282,875 (before expenses) Shares on issue prior to the Offer 5,710,500 Maximum number of Shares on issue at end of the Offer 7,614,000 The figures above assume that all Entitlements are taken up. The figures are also approximate as individual Entitlements will be rounded down to the nearest whole number, and will only be determined on the Record Date. Key Dates This is dated 21 March 2011. The following table sets out the indicative key dates relating to the Offer: Activity Announcement of Rights Issue Shares trade on an 'ex' Entitlement basis and rights trading commences Record Date Date Before market opens on Monday 21 March 2011 Monday 28 March 2011 Friday 1 April 2011 (7.00pm Melbourne time) Offer opens Thursday 7 April 2011 Rights trading ends Thursday 21 April 2011 Shares quoted on a deferred settlement basis Wednesday 27 April 2011 Offer closes Shares are allotted and issued and holding statements are despatched Monday 2 May 2011 (5.00pm Melbourne time) Tuesday 10 May 2011 (by 12.00pm Melbourne time) Deferred settlement trading ends Tuesday 10 May 2011 Normal ASX trading for New Shares commences Wednesday 11 May 2011 These dates are indicative only and are subject to change. The Company reserves the right to amend this indicative timetable at any time and in particular, subject to the Corporations Act and ASX Listing Rules, to extend the latest date for receipt of Entitlement and Acceptance Forms, to accept late Entitlement and Acceptance Forms either generally or in particular cases, or to cancel the Rights Issue without prior notice. 1
Details of Offer 1 Details of the Offer 1.1 The Offer The Company is making a renounceable pro-rata offer of New Shares at an issue price of $2.25 each on the basis of 1 New Share for every 3 Existing Shares held on the Record Date. The New Shares will be fully paid and will rank equally in all respects with Existing Shares. The Offer Price is payable in full by Eligible Shareholders on acceptance of the Offer. As at the date of this, the issue price for New Shares represents a discount of 27% (based on the last sale price of ordinary shares as at the close of market on 18 March 2011). As at the Record Date, the Company has 5,710,500 Existing Shares on issue. If all the Entitlements to Eligible Shareholders are taken up, then 1,903,500 New Shares will be issued under the Offer, raising approximately $4,282,875 (before expenses of the Offer). Where the determination of the entitlement of any Eligible Shareholder results in a fraction of a New Share, such fraction will be rounded down to the nearest whole New Share. Eligible Shareholders may apply for all or only part of their Entitlement. 1.2 Your Entitlement The number of New Shares you are entitled to is shown on your personalised Entitlement and Acceptance Form attached to this. You can choose to: subscribe for all of your Entitlement; subscribe for part of your Entitlement; subscribe for Shortfall Shares, if you have also subscribed for all of your Entitlement; or not take up your Entitlement, which will then lapse. The Offer is renounceable. As such, if you do not wish to take up any or all of your Entitlement, you are able to trade your rights on ASX or otherwise privately transfer your rights. See section 1.5 for details on dealing with your rights. 1.3 Eligible Shareholder In order to qualify for the Rights Issue, a Shareholder must: be registered as a Shareholder at the close of business on the Record Date; and have a registered address in Australia or New Zealand as recorded by the Share Registry as at the Record Date. 2
1.4 Purpose of the Rights Issue The purpose of the Rights Issue is to raise up to $4,282,875 (before offer costs) which will be used by the Company to reduce balance sheet gearing through the repayment of various borrowings, provide additional working capital, and allow scope for Chalmers to take up business opportunities as and when they arise. 1.5 Rights trading The rights to New Shares under the Offer are renounceable. Accordingly, you may trade on ASX or otherwise privately transfer your rights to subscribe for New Shares under the Offer to another person during the rights trading period commencing on 28 March 2011 and ending on 21 April 2011. If you do not take up or trade your entitlement to the New Shares under the Offer by the Closing Date, the Offer to you and your Entitlement will lapse. 1.6 Opening Date and Closing Date The Offer opens on Monday 7 April 2011. The Company will accept Entitlement and Acceptance Forms until 5.00pm (Melbourne time) on 2 May 2011 or such other date as the Directors in their absolute discretion determine, subject to the Corporations Act and the ASX Listing Rules. 1.7 Allotment and Issue of New Shares New Shares under the Rights Issue are expected to be allotted and issued on 10 May 2011 (subject to variation at the discretion of the Board), and the despatch of holding statements is expected to occur on this date. It is the responsibility of the Applicants to determine the allocation prior to trading in the New Shares. Applicants who sell New Shares before they receive their holding statements will do so at their own risk. 1.8 Application Monies Until New Shares are issued, the Company will hold the Application Monies on trust in a bank account in Australia. The account will be established and kept solely for the purpose of depositing Application Monies and retaining those funds for as long as required under the Corporations Act. Any application monies received but not applied to subscriptions of New Shares or Shortfall Shares will be refunded as soon as practicable. Any interest accrued on Application Monies will be retained by the Company and will not be paid to the relevant Eligible Shareholder including if the Rights Issue is cancelled or withdrawn or if subscriptions for Shortfall Shares are unsuccessful. 1.9 Shortfall Shares Eligible Shareholders who take up their Entitlements in full may apply for Shortfall Shares. In addition, the Company may offer Shortfall Shares to, and accept applications for Shortfall Shares from, any other person who does not require disclosure under Chapter 6D of the Corporations Act (including, for instance, institutional investors). It is important to note that the offer of Shortfall Shares will remain until 2 June 2011 (or such other date determined by the Directors) (Shortfall Closing Date), being after the close of the renounceable pro-rata offer. 3
The Company will not accept applications for Shortfall Shares any later than the Shortfall Closing Date. The Shortfall Shares will only be issued if the Offer is undersubscribed to make up for the shortfall in subscriptions, and they will be issued at the same price and on the same terms as the New Shares. As part of the offer of Shortfall Shares, the directors reserve the right to issue (or refuse to issue) the Shortfall Shares at their discretion. In particular, if the Company receives applications for Shortfall Shares in excess of the shortfall in subscriptions, the Company will not accept excess applications and will reject applications at its absolute discretion. In this regard, the Directors, in their sole discretion, reserve the right to scale back or reduce to zero the number of Shortfall Shares applied for by any Eligible Shareholder or any other person. Shortfall Shares will not be issued to Eligible Shareholders or any other person where to do so would involve a breach of the Corporations Act or any applicable law. Any application monies received but not applied to subscriptions of Shortfall Shares will be refunded as soon as practicable. Interest will not be paid on monies refunded. Exemption 3 to Listing Rule 7.1 provides that the issue of any Shortfall Shares that are not subscribed for by Eligible Shareholders is excluded from the operation of Listing Rule 7.1 which, in some circumstances, limits the Company's ability to issue shares in excess of 15% of the Company's issued share capital provided that certain conditions are met. The conditions specified in this satisfy the requirements contained in Exemption 3 to Listing Rule 7.1. 1.10 Overseas Shareholders The New Shares being offered under this are being offered to Eligible Shareholders only. The Company has determined that it is unreasonable to extend the offer to Non-Eligible Foreign Shareholders having considered the number of such Non-Eligible Foreign Shareholders, the number and value of the shareholdings held by those Non-Eligible Foreign Shareholders and the costs of complying with the laws and any requirements of any regulatory authority in each applicable jurisdiction in which Non-Eligible Foreign Shareholders reside. The Company will appoint a nominee in Australia to sell the rights that would otherwise have been offered to Non-Eligible Foreign Shareholders, and to send any proceeds from the sale of those rights (net of expenses) to the Non-Eligible Foreign Shareholders. In respect of Eligible Shareholders with registered addresses in New Zealand, this Offer is offered in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (NZ) and neither this document nor the Offer is registered with the Companies Office of New Zealand. The distribution of this outside Australia and New Zealand may be restricted by law. If you come into possession of this, you should observe any such restrictions and should seek your own advice on such restrictions. Any failure to comply with such restrictions may contravene the applicable securities laws. 4
1.11 ASX Quotation An application will be made to ASX for official quotation of New Shares. If permission for quotation is not granted by ASX, the New Shares will not be allotted and issued, and Application Monies will be refunded (without interest) as soon as practicable. 1.12 CHESS Under Clearing House Electronic Subregister System (CHESS), Applicants will not receive a certificate but will receive a statement of their holding of New Shares. If you are broker sponsored, and you take up your Entitlement, ASX Settlement will send you a CHESS statement. The CHESS statement will set out the number of New Shares issued under this Information Memorandum, provide details of your holder identification number and the participant identification number of the sponsor. If you are registered in the issuer sponsored subregister, your statement will be despatched by the Share Registry and will contain the number of New Shares issued to you under this and your security holder reference number. 1.13 No underwriting The Rights Issue is not underwritten and, as such, there is no guarantee that all the projected proceeds of the Offer will be raised. 1.14 Taxation implications Shareholders should be aware that there may be taxation implications of participating in the Offer, and subscribing for New Shares or trading your rights to subscribe for New Shares. Shareholders should consult their own professional taxation advisers to obtain advice in relation to the taxation laws and regulations applicable to their personal circumstances. 1.15 Document not a Prospectus This document is provided for information purposes only, and is not a prospectus or other disclosure document for the purposes of the Corporations Act. Accordingly, this Information Memorandum does not necessarily contain all of the information that an investor would find in a prospectus or which may be required to make an informed investment decision regarding, or about the rights attaching to, the New Shares offered by this. It is important to note that, as the Company is a public company listed on the ASX, it is subject to the continuous disclosure requirements set out in Chapter 3 of the listing rules of the ASX. As such, investors should refer to the ASX announcements platform (which can be located at www.asx.com.au) for any announcements made by the Company, including announcements in respect of the offers contained in this, the Half Yearly Report (for the financial half year ended 31 December 2010), and the recent announcement regarding the trading performance for the 6 months ended 31 December 2010 and the effect of the recent floods in Queensland. 5
2 RISK FACTORS You should carefully consider the following risk factors and the other information contained in this and any announcements made by the Company on the ASX before deciding to apply for New Shares or Shortfall Shares under this Information Memorandum. Specific Risks There are a range of specific risks associated with the Company s operations. Potential investors in the Company should note the following specific risks prior to investing. This section describes certain specific but not all risks associated with an investment in the Company. 2.1 Competition The Company can provide no assurance that it will be able to compete effectively with existing or new competitors or that increased competition will not have a material and adverse effect on its future operating and financial performance. In particular, increased competition may have an adverse effect on the Company's financial performance. 2.2 Implementation and Management of Company Growth Implementation of the Company's growth strategy will require additional infrastructure, staffing, management, operations and systems resources. There is a risk that the Company may not be able to deploy suitable resources (including staff) to take advantage of the growth opportunities to the extent expected within expected time frames. 2.3 Industry Position and Maintaining Critical Mass Given the Company's current position in the market, it is important that the Company continues to strive to maintain critical mass. If the Company cannot maintain critical mass within the industry, there is a risk that it will become uncompetitive and that its financial performance may be adversely affected. 2.4 Industry Accreditations and Licenses There are a number of Industry accreditations and licenses currently held by the Company. These enable the Company to operate and perform in the industry and, therefore, maintenance of these accreditations and licenses is important to the success of the Company. If currently unforeseen circumstances arise, including changes to the regulations or requirements for the maintenance of such accreditations and licences, the Company may either be unable to retain or maintain its accreditations and licenses, or incur increased costs to do so. 2.5 Technological Change Technology within the supply chain management industry is constantly changing. Technological change could materially affect the Company's financial performance. If the Company is unable to keep up with technological change, it may become uncompetitive and its financial performance may be adversely affected. 6
2.6 Qualified Personnel and Key Personnel Recruiting and retaining qualified personnel is important to the Company's success. The Company's future success depends largely on the continual employment of its senior management and key personnel. The retention of the services of these people cannot be guaranteed. 2.7 Future Funding If the Company requires access to further funding at any stage in the future, the Company may be materially adversely affected if, for any reason, access to that funding is not available, either at all or on acceptable terms and conditions. There can be no assurance that additional funds will be available when required. If additional funds should be raised by issuing equity securities, this might result in dilution of existing shareholders. The pricing of future share issues will also depend upon the results of the Company's activities, market factors, investor demand for shares and the need for capital by either debt or equity capital raisings. 2.8 Downturn in Demand Factors adversely affecting the demand for the services provided by the Company, such as a decline in general economic conditions, increased competition in the supply chain management market or technological change could materially affect the Company's financial performance. There is a risk that downturn in demand could impact on the success of the Company. 2.9 Environment and Public Relations General Risks Given the nature of the Company's industry, there is a risk that future legislative and regulatory changes with respect of the environment may have possible adverse affects on the financial performance of the Company. In addition, although the Company strives to conduct its business in accordance with best practice with respect to the environment, if there is an environmental incident in relation to the Company's business, there is a risk of a public relations backlash which may affect the Company's financial performance. In addition to the specific risks outlined above, there are a range of general risks associated with an investment in shares and with the Company s operations and the industry in which it operates. Factors such as government legislation, occupational health and safety issues, inflation, interest rates taxation law, accounting standards, natural disasters, social upheaval, war and terrorism may have an impact on prices, operating costs and market conditions generally. The Company's operations and future profitability can be affected by these factors, which are beyond the control of the Company. Further, given the inherent risks and nature of investing in shares, the Company does not guarantee or make any representation regarding the success of the Company, the repayment of any capital, the payment of dividends or the price at which the shares will trade on the ASX. 7
3 HOW TO APPLY 3.1 Acceptance of the New Shares under this If you wish to accept your Entitlement, your application for New Shares must be made on the Entitlement and Acceptance Form which accompanies this. Acceptance may be for: all of your Entitlement; or part of your Entitlement. Eligible Shareholders who take up their Entitlements in full may also apply for Shortfall Shares by following the instructions on the Entitlement and Acceptance Form and specifying the total number of Shares for which you wish to apply. Further, if any acceptance exceeds the Entitlement, the Directors may deem that acceptance to be acceptance for the full Entitlement and an application for additional Shortfall Shares. Please complete the Entitlement and Acceptance Form by filling in the details in the spaces provided and attaching payment for the Application Monies indicated on the Entitlement and Acceptance Form. If you provide insufficient funds to meet the Application Monies due to take up your Entitlement your Application may be rejected. Lodgement of completed Entitlement and Application Forms must be received on or before the Closing Date (by delivery or by post) at: By delivery or post: Chalmers Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 By hand delivery: Chalmers Limited C/- Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 3.2 Forms of Payment Payment may be made by way of BPAY, cheque, bank draft or money order. Cash will not be accepted and receipts will not be issued. Please refer to payment instructions contained in the attached Entitlement and Application Form in order to complete your lodgement. 8
Cheques, bank drafts or money orders must be drawn on an Australian branch of a financial institution in Australian currency, made payable to 'Chalmers Limited - Rights Issue Account' and crossed 'Not Negotiable'. 3.3 Non-acceptance If you do not wish to accept any of your Entitlement or are precluded from doing so because you are a Non-Eligible Foreign Shareholder, you are not obliged to do anything. The number of Shares you hold and the rights attached to those Shares will not be affected should you choose not to accept any of your Entitlement. However, your percentage shareholding in the Company will be diluted. 3.4 Enquiries concerning your entitlement If you have any questions concerning your entitlement, please contact: John Fedorko Company Secretary Chalmers Limited Telephone: +61 3 9316 2011 3.5 No withdrawal Your completed Entitlement and Acceptance Form, once sent to the Company, cannot be withdrawn. 3.6 Share registry Link Market Services Limited Level 1, 333 Collins Street Melbourne VIC 3000 Telephone: 1300 554 474 9
GLOSSARY A$ or $ An Australian dollar. Applicant An Eligible Shareholder who applies for New Shares under this Information Memorandum. Application An application for a specified number of New Shares by an Applicant under this. Application Monies Funds accompanying a completed Application and Entitlement Form. ASIC Australian Securities and Investment Commission. ASX Settlement ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532 ASX ASX Limited. ASX Listing Rules The listing rules of the ASX. Board The Directors acting as a board of the Company. Closing Date The date on which the Offer closes, which is currently intended to be 2 May 2011 Company Chalmers Limited ABN 34 004 471 032 Corporations Act Corporations Act 2001 (Cth) Director Director of the Company. Eligible Shareholder All Shareholders who meet the requirements set out in section 1.3 of this. Entitlement The number of New Shares each Eligible Shareholder is offered under the Offer as designated on their personalised Entitlement and Acceptance Form. Entitlement and Acceptance Form The Application form which is included in or accompanies this Information Memorandum. Existing Shares Shares on issue at the Record Date. Information This. Memorandum New Share A Share offered and issued under this, the terms and conditions of which are set out in this. Non-Eligible All Shareholders who are not Eligible Shareholders. Foreign Shareholder Offer The offer of New Shares under this. Offer Period 7 April 2011 to 2 May 2011, or any other date as may be determined by the Company. Offer Price $2.25, being the price payable for one New share under this Information Memorandum. Opening Date Monday 7 April 2011 Record Date 7.00pm (Melbourne time) Friday 1 April 2011. Rights Issue The entitlement to New Shares available for issue under this Information Memorandum. Share A fully paid ordinary share in the capital of the Company. Shareholder A holder of Shares as recorded by the Share Registry. Share Registry Link Market Services Limited. Shortfall Closing Date The date on which the offer in respect of Shortfall Shares closes, which is currently intended to be 2 June 2011. Shortfall Shares Any New Shares offered under this for which valid Applications are not received by the Company by the Closing Date, but excluding any Applications received for Shares in excess of a person's Entitlement. 10