OFFERING CIRCULAR DATED 15 JULY 2010 THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN ANY DOUBT AS TO THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR LEGAL, FINANCIAL, TAX OR OTHER PROFESSIONAL ADVISER. This Offering Circular and the accompanying PAL and VPS Subscription Form (each term as defined herein) have not been and will not be approved by, lodged with or registered by any regulatory body or authority in any jurisdiction. In particular, this Offering Circular and the accompanying PAL and VPS Subscription Form do not constitute a prospectus or an offer information statement under the Securities and Futures Act, Chapter 289 of Singapore, and have not been approved by, lodged with or registered by the Monetary Authority of Singapore, and also do not constitute a prospectus under the Norwegian Securities Trading Act of 29 June 2007 and have not been reviewed or approved by or registered with the Register of Business Enterprises, the Financial Supervisory Authority of Norway or any other regulatory body or authority in Norway. No action has been or will be taken to permit an offer of the Rights, the VPS Subscription Rights or the Rights Shares (each term as defined herein), or the possession, circulation or distribution of this Offering Circular or the accompanying PAL or VPS Subscription Form, in any jurisdiction where action would be required for that purpose. Accordingly, the Rights, the VPS Subscription Rights and the Rights Shares may not be offered, sold or delivered, directly or indirectly, and this Offering Circular and the accompanying PAL and VPS Subscription Form may not be circulated or distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. This Offering Circular and the accompanying PAL and VPS Subscription Form do not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of, any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended ( Securities Act )). The Rights, the VPS Subscription Rights and the Rights Shares have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered or sold, directly or indirectly, in the United States or to, or for the account or benefit of, U.S. Persons absent registration except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No Rights Shares shall be allotted or allocated on the basis of this Offering Circular later than six months after the date of this Offering Circular. CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED (FORMERLY KNOWN AS YANTAI RAFFLES SHIPYARD LIMITED) (Incorporated in Singapore on 7 March 1994) (Registration Number 199401560D) RENOUNCEABLE NON-UNDERWRITTEN RIGHTS ISSUE ( RIGHTS ISSUE ) OF 136,782,500 NEW ORDINARY SHARES ( RIGHTS SHARES ) IN THE CAPITAL OF CIMC RAFFLES OFFSHORE (SINGAPORE) LIMITED ( CIMC RAFFLES ), AT AN ISSUE PRICE OF US$0.735 FOR EACH RIGHTS SHARE, ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) EXISTING SHARES IN THE CAPITAL OF CIMC RAFFLES HELD AS AT THE BOOKS CLOSURE DATE (AS DEFINED HEREIN), ROUNDED DOWN TO THE NEAREST RIGHTS SHARE IMPORTANT DATES AND TIMES Last date and time for trading of the VPS Subscription Rights on the NOTC (as herein defined) Last date and time for subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) by Entitled VPS Shareholders (as herein defined) Last date and time for acceptance of and (if applicable) application and payment for Rights Shares by Entitled Registered Shareholders (as herein defined) : 26 July 2010 at 4.30 p.m., Norwegian time : 26 July 2010 at 4.30 p.m., Norwegian time : 2 August 2010 at 5.00 p.m., Singapore time
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IMPORTANT NOTICE Capitalised terms used below which are not otherwise defined herein shall have the same meanings as ascribed to them under the section Definitions of this Offering Circular. For Entitled Registered Shareholders, acceptances of the Rights Shares and (if applicable) applications for excess Rights Shares must be made through the Share Registrar. For Entitled VPS Shareholders, subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) pursuant to the VPS Subscription Rights must be made through the VPS Registrar. For investors who hold Shares through a nominee, acceptances of and (if applicable) excess applications for, or subscriptions for, the Rights Shares must be done through the nominee. Such investors are advised to provide their respective nominees with the appropriate instructions early in order for such nominees to make the relevant acceptances of and (if applicable) excess applications for, or subscriptions for, the Rights Shares on their behalf by the relevant Closing Date. Any acceptance of and (if applicable) excess applications for, or subscription for, the Rights Shares made directly through the Share Registrar, the VPS Registrar and/or CIMC Raffles will be rejected. Persons wishing to purchase any Rights or VPS Subscription Rights, or subscribe for, any Rights Shares offered by this Offering Circular, should before deciding whether to so purchase or subscribe, carefully read this Offering Circular in its entirety in order to make an informed assessment of, among other things, the assets and liabilities, profits and losses, financial position, financial performance, risk factors and prospects of CIMC Raffles and the CIMC Raffles Group, and the rights and liabilities attaching to the Rights, the VPS Subscription Rights and the Rights Shares. They should rely, and shall be deemed to have relied, on their own independent enquiries and investigations of the assets and liabilities, profits and losses, financial position, financial performance, risk factors and prospects of CIMC Raffles and the CIMC Raffles Group, as well as any bases and assumptions upon which financial projections, if any, relating to CIMC Raffles or the CIMC Raffles Group are made or based, and their own appraisal and determination of the merits of investing in CIMC Raffles and the CIMC Raffles Group in the light of their personal circumstances (including financial and taxation affairs). No information in this Offering Circular constitutes, or shall be deemed or considered to constitute, investment, business, financial, legal, tax or other advice. Persons in doubt as to the action they should take should consult their investment, business, financial, legal, tax or other professional adviser before deciding whether to purchase the Rights or VPS Subscription Rights or subscribe for the Rights Shares. No person has been authorised to give any information or to make any representations, other than those contained in this Offering Circular, in connection with the Rights Issue or the issue of the Rights, the VPS Subscription Rights and the Rights Shares and, if given or made, such information or representations must not be relied upon as having been authorised by CIMC Raffles or the CIMC Raffles Group. Save as may be expressly stated in this Offering Circular, nothing contained herein is, or may be relied upon as, a promise or representation as to the future financial position, financial performance, prospects or policies of CIMC Raffles or the CIMC Raffles Group. Neither the delivery of this Offering Circular nor the issue of the Rights, the VPS Subscription Rights and the Rights Shares shall, under any circumstances, constitute a continuing representation, or give rise to any implication, that there has been no material change in the affairs of CIMC Raffles or the CIMC Raffles Group, or any of the information contained herein, since the date hereof. Where such changes occur after the date hereof and are material, or are required to be disclosed by law, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at http://www.cimc-raffles.com and, where permitted, the website of the Norwegian Securities i
IMPORTANT NOTICE Dealers Association at http://www.nfmf.no as well. All Entitled Registered Shareholders and their renouncees, and all Entitled VPS Shareholders and the Purchasers, as the case may be, should take note of any such announcement and, upon the release of such announcement, shall be deemed to have notice of such changes. CIMC Raffles makes no representation or warranty to any person regarding the legality of an investment in the Rights, the VPS Subscription Rights, the Rights Shares and/or the Shares by such person under any investment or any other laws or regulations. CIMC Raffles is not making any representation, warranty or recommendation whatsoever as to the merits of the Rights Issue, the Rights, the VPS Subscription Rights, the Rights Shares, the Shares, CIMC Raffles, the CIMC Raffles Group or any other matter related thereto or in connection therewith. Nothing in this Offering Circular or its accompanying documents shall be construed as a recommendation to purchase or subscribe for the Rights, the VPS Subscription Rights, the Rights Shares and/or the Shares. This Offering Circular and the accompanying documents have been prepared solely for the purpose of the acceptance of and excess application for the Rights Shares by Entitled Registered Shareholders through the Share Registrar, and subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) by Entitled VPS Shareholders through the VPS Registrar, under the Rights Issue, and may not be relied upon by any persons (other than Entitled Registered Shareholders and their renouncees, and the Entitled VPS Shareholders and the Purchasers) or for any other purpose. This Offering Circular, the PAL and the VPS Subscription Form may not be used for the purpose of, and do not constitute or form part of, any offer or sale of, any invitation for subscription or purchase of, or any offer to subscribe or purchase, the Rights, the VPS Subscription Rights or the Rights Shares in any jurisdiction or in any circumstances in which such an offer, sale, invitation or solicitation is unlawful or not authorised or to any person to whom it is unlawful to make such an offer, sale, invitation or solicitation. The distribution of this Offering Circular and/or its accompanying documents may be prohibited or restricted by law (either absolutely or subject to various requirements, whether legal or administrative, being complied with) in certain jurisdictions under the relevant laws of those jurisdictions. Entitled Shareholders or any other persons having possession of this Offering Circular are advised to keep themselves informed of and observe such prohibitions and restrictions at their own expense and without liability to CIMC Raffles, the Share Registrar or the VPS Registrar. Please refer to the section Eligibility of Shareholders to Participate in the Rights Issue of this Offering Circular for further information. ii
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS All statements contained in this Offering Circular, statements made in press releases and oral statements that may be made by CIMC Raffles or its Directors, officers or employees acting on its behalf, that are not statements of historical fact, constitute forward-looking statements. Some of these statements can be identified by words that have a bias towards the future, or are forward-looking, such as anticipate, believe, could, estimate, expect, forecast, if, intend, may, plan, possible, probable, project, should, will and would or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding the CIMC Raffles Group s expected financial position, business strategy, future plans and prospects are forward-looking statements. These forward-looking statements, including statements as to the CIMC Raffles Group s revenue and profitability, prospects, future plans and other matters discussed in this Offering Circular regarding matters that are not historical facts, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the CIMC Raffles Group s actual, future results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by such forward-looking statements. Given the risks and uncertainties that may cause the CIMC Raffles Group s actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forward-looking statements in this Offering Circular, undue reliance must not be placed on these statements. The CIMC Raffles Group s actual results, performance or achievements may differ materially from those anticipated in these forward-looking statements. Neither CIMC Raffles nor any other person represents or warrants that the CIMC Raffles Group s actual future results, performance or achievements will be as discussed in those statements. Further, CIMC Raffles disclaims any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. Where such developments, events or circumstances occur and are material, or are required to be disclosed by law, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at http://www.cimc-raffles.com and, where permitted, the website of the Norwegian Securities Dealers Association at http://www.nfmf.no as well. iii
CORPORATE INFORMATION Directors : Mai Bo Liang (Chairman) Brian Chang (Deputy Chairman and Chief Executive Officer) Chang Yee Meng Malcolm (Executive Director) Yu Ya (Executive Director) Yu Yu Qun (Executive Director) Wang Yu (Executive Director) Liu Chee Ming (Independent Director) Yu Ning (Independent Director) Zhang Li Min (Independent Director) Registered Address : 1 Claymore Drive #08-04 Orchard Tower Rear Block Apartment Singapore 229594 Principal Place of Business : No. 70 Zhifu East Road Zhifu Island, Zhifu District Yantai Shandong People s Republic of China 264000 Legal Adviser to the Company On Singapore Laws : Kelvin Chia Partnership 6 Temasek Boulevard 29th Floor Suntec Tower Four Singapore 038986 Share Registrar : Kinetica Pte. Ltd. 6 Temasek Boulevard 29th Floor Suntec Tower Four Singapore 038986 VPS Registrar : DnB NOR Bank ASA Registrars Department Stranden 21 NO-0021 Oslo Norway Receiving Bank : The Royal Bank of Scotland N.V., Singapore 1 Raffles Quay South Tower Level 21 Singapore 048583 iv
CONTENTS Page DEFINITIONS........................................................... 2 EXPECTED TIMETABLE OF KEY EVENTS..................................... 7 LETTER FROM THE BOARD............................................... 8 SUMMARY OF RIGHTS ISSUE.............................................. 12 SUMMARY OF THE BUSINESS OF THE CIMC RAFFLES GROUP................... 15 RISK FACTORS......................................................... 17 ELIGIBILITY OF SHAREHOLDERS TO PARTICIPATE IN THE RIGHTS ISSUE.......... 32 SELLING RESTRICTIONS................................................. 35 TAKE-OVER LIMITS...................................................... 38 USE OF PROCEEDS..................................................... 39 INFORMATION ON THE CIMC RAFFLES GROUP............................... 40 OPERATING AND FINANCIAL REVIEW AND PROSPECTS........................ 46 ADDITIONAL INFORMATION ON THE RIGHTS ISSUE........................... 52 APPENDICES A Consolidated Income Statement for FY2007 and Consolidated Statement of Comprehensive Income for FY2008 and FY2009........................... 57 B Statements of Financial Position as at 31 December 2009.................... 59 C Consolidated Statement of Cash Flows for FY2009......................... 60 D Procedures for Entitled Registered Shareholders.......................... 62 E Procedures for Entitled VPS Shareholders................................ 67 1
DEFINITIONS In this Offering Circular, the PAL and the VPS Subscription Form, the following definitions shall apply throughout unless the context otherwise requires or unless otherwise stated: Announcement Date : 5 July 2010, being the date of announcement of the Rights Issue Articles : The Articles of Association of CIMC Raffles, as amended or modified from time to time Board : The board of Directors as at the date of this Offering Circular Books Closure Date : In respect of: (a) Registered Shareholders, 5.00 p.m. on 15 July 2010, being the time and date at and on which the Register of Members and Share Transfer Books of CIMC Raffles will be closed to determine the provisional allotments of Rights Shares of Entitled Registered Shareholders under the Rights Issue; or (b) VPS Shareholders, 15 July 2010, Norwegian time, being the date on which VPS Shareholders must be registered in the VPS register of CIMC Raffles to determine entitlements of Entitled VPS Shareholders under the Rights Issue (the Shares are traded ex-rights on the NOTC from 9.00 a.m. on 12 July 2010, Norwegian time) CIMC : China International Marine Containers (Group) Co., Ltd. CIMC HK : China International Marine Containers (Hong Kong) Limited CIMC Offshore Holdings : CIMC Offshore Holdings Limited (formerly known as Bright Day Limited) CIMC Raffles : CIMC Raffles Offshore (Singapore) Limited (formerly known as Yantai Raffles Shipyard Limited) CIMC Raffles ESOS : The CIMC Raffles Offshore (Singapore) Limited Executive Share Option Scheme approved and adopted by CIMC Raffles at an extraordinary general meeting held on 21 June 2006 CIMC Raffles Group : CIMC Raffles and its subsidiaries Closing Date : In respect of: (a) the Rights, 5.00 p.m. on 2 August 2010, or such other time(s) and/or date(s) as may be announced from time to time by CIMC Raffles, being the last time and date for acceptance of and (if applicable) excess application and payment for, the Rights Shares through the Share Registrar; or 2
DEFINITIONS (b) the VPS Subscription Rights, 4.30 p.m. on 26 July 2010, Norwegian time, or such other time(s) and/or date(s) as may be announced from time to time by CIMC Raffles, being the last time and date for subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) by Entitled VPS Shareholders through the VPS Registrar Code : The Singapore Code on Take-overs and Mergers, as amended or modified from time to time Companies Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time Directors : The directors of CIMC Raffles as at the date of this Offering Circular Entitled Registered Shareholders : Registered Shareholders as at the Books Closure Date whose registered addresses with CIMC Raffles are in Singapore or Norway, and such other Registered Shareholders as at the Books Closure Date with registered addresses outside Singapore and Norway where CIMC Raffles is satisfied, at its absolute discretion, that it is not precluded from offering the Rights Shares to those Registered Shareholders either unconditionally or after compliance with conditions which it regards as acceptable Entitled Shareholders : Entitled Registered Shareholders and Entitled VPS Shareholders Entitled VPS Shareholders : VPS Shareholders as at the Books Closure Date whose registered addresses with the VPS Registrar are in Singapore or Norway, and such other VPS Shareholders as at the Books Closure Date with registered addresses outside Singapore and Norway where CIMC Raffles is satisfied, at its absolute discretion, that it is not precluded from offering the Rights Shares to those VPS Shareholders either unconditionally or after compliance with conditions which it regards as acceptable FY : Financial year ended or, as the case may be, ending 31 December Irrevocable Undertaking : The irrevocable undertaking dated 5 July 2010 given by CIMC Offshore Holdings to CIMC Raffles in relation to the Rights Issue, as described in paragraph 4.6 of the section Additional Information on the Rights Issue of this Offering Circular Issue Price : The issue price of the Rights Shares, being US$0.735 for each Rights Share 3
DEFINITIONS Latest Practicable Date : 2 July 2010, being the latest practicable date prior to the printing of this Offering Circular NAV : Net asset value Non-Entitled Shareholders : Registered Shareholders other than Entitled Registered Shareholders, and VPS Shareholders other than Entitled VPS Shareholders NOTC : The Norwegian Over-The-Counter system administered and operated by the Norwegian Securities Dealers Association NOTC Trading Period : The period from 9.00 a.m. on 20 July 2010 to 4.30 p.m. on 26 July 2010, Norwegian time, during which the VPS Subscription Rights will be traded on the NOTC Offering Circular : This document together with (where the context requires) the PAL and the VPS Subscription Form and all other accompanying documents, including any supplementary or replacement document, which may be issued by CIMC Raffles in connection with the Rights Issue PAL : Provisional allotment letter to be issued to Entitled Registered Shareholders setting out the provisional allotments of Rights Shares of such Entitled Registered Shareholders under the Rights Issue PRC : People s Republic of China Purchaser : A purchaser of the VPS Subscription Rights on the NOTC whose registered address with the VPS Registrar is in Singapore or Norway Registered Shareholders : Registered holders of Shares named in the Register of Members of CIMC Raffles Registered Shareholders Subscription Period : The period from 19 July 2010 to the Closing Date, during which Entitled Registered Shareholders may accept and (if applicable) apply and pay for the Rights Shares through the Share Registrar Rights : Provisional entitlements of Entitled Registered Shareholders to subscribe for the Rights Shares under the Rights Issue, as evidenced by the PAL Rights Issue : Renounceable non-underwritten rights issue by CIMC Raffles of 136,782,500 Rights Shares at the Issue Price, on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date, rounded down to the nearest Rights Share, on the terms and the conditions of this Offering Circular 4
DEFINITIONS Rights Shares : 136,782,500 new Shares to be allotted and issued by CIMC Raffles pursuant to the Rights Issue SFA : Securities and Futures Act, Chapter 289 of Singapore, as amended or modified from time to time Shares : Issued and paid-up ordinary shares in the capital of CIMC Raffles Share Options : Options to subscribe for Shares granted under the CIMC Raffles ESOS Share Registrar : Kinetica Pte. Ltd. Substantial Shareholder : A person who has an interest or interests in voting shares in CIMC Raffles representing not less than 5% of all the voting Shares in CIMC Raffles US : United States of America VPS : Verdipapirsentralen, or Norwegian Central Securities Depository VPS Registrar : DnB NOR Bank ASA, Registrar Department VPS Shareholders : Persons who are registered in the VPS register of CIMC Raffles as holders of beneficial interests in the VPS Shares VPS Shares : Shares registered in the name of the VPS Registrar and held by the VPS Registrar as nominee for the VPS Shareholders, and which are registered in the VPS and traded on the NOTC VPS Subscription Form : Subscription form to be used by Entitled VPS Shareholders to subscribe for the Rights Shares (including, if applicable, excess Rights Shares) through the VPS Registrar VPS Subscription Period : The period from 20 July 2010 to the Closing Date, Norwegian time, during which Entitled VPS Shareholders may subscribe for the Rights Shares (including, if applicable, excess Rights Shares) pursuant to the VPS Subscription Rights through the VPS Registrar VPS Subscription Rights : VPS registered subscription rights derived from the Rights in respect of the VPS Shares held by the VPS Registrar, which subscription rights are tradable on the NOTC during the NOTC Trading Period C : Euro dollar NOK : Norwegian Krone RMB : Chinese Renminbi 5
DEFINITIONS S$ and cents : Singapore dollar and cents, respectively US$ and US cents : United States dollar and cents, respectively % or per cent : Percentage or per centum Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall, where applicable, include corporations. Any reference to a time of day in this Offering Circular, the PAL and the VPS Subscription Form shall be a reference to Singapore time unless otherwise stated. Any reference to a date and/or time in this Offering Circular, the PAL and the VPS Subscription Form in relation to the Rights Issue (including but not limited to the Closing Date, and the last dates and times for acceptance and (if applicable) excess application and payment by Entitled Registered Shareholders and for subscription by Entitled VPS Shareholders) shall include such other date(s) and/or time(s) as may be announced from time to time by CIMC Raffles. Any reference in this Offering Circular, the PAL and the VPS Subscription Form to any enactment is a reference to that enactment for the time being amended or re-enacted. Any words defined in the Companies Act or the SFA, or any modification thereof, and used in this Offering Circular shall, where applicable, have the meanings ascribed to them respectively under the Companies Act, the SFA, or such modification thereof, as the case may be, unless otherwise provided. Any discrepancies in figures included in this Offering Circular between the amounts listed and the totals thereof are due to rounding. Accordingly, figures shown as totals in this Offering Circular may not be an arithmetic aggregation of the figures that precede them. 6
EXPECTED TIMETABLE OF KEY EVENTS The important dates and times (Singapore time, unless otherwise stated) for the Rights Issue are as follows: Shares traded ex-rights on the NOTC : Monday, 12 July 2010 from 9.00 a.m., Norwegian time Books Closure Date in respect of Registered Shareholders Books Closure Date in respect of VPS Shareholders Despatch of Offering Circular and PAL to Entitled Registered Shareholders Despatch of Offering Circular and VPS Subscription Form to Entitled VPS Shareholders Commencement of Registered Shareholders Subscription Period : Thursday, 15 July 2010 at 5.00 p.m. : Thursday, 15 July 2010, Norwegian time : Friday, 16 July 2010 : Friday, 16 July 2010, Norwegian time : Monday, 19 July 2010 Commencement of NOTC Trading Period : Tuesday, 20 July 2010 from 9.00 a.m., Norwegian time Commencement of VPS Subscription Period : Tuesday, 20 July 2010, Norwegian time Last date and time for splitting Rights of Entitled Registered Shareholders : Monday, 26 July 2010 at 5.00 p.m. Expiry of NOTC Trading Period : Monday, 26 July 2010 at 4.30 p.m., Norwegian time Expiry of VPS Subscription Period : Monday, 26 July 2010 at 4.30 p.m., Norwegian time Expiry of Registered Shareholders Subscription Period Payment date for subscriptions made through the VPS Registrar : Monday, 2 August 2010 at 5.00 p.m. : Monday, 9 August 2010 Expected date for issue of Rights Shares : Friday, 13 August 2010 Expected date for crediting relevant VPS accounts with Rights Shares Expected date for commencement of trading of Rights Shares on the NOTC : Monday, 16 August 2010 : Monday, 16 August 2010 The above timetable is indicative only and is subject to change. As at the date of this Offering Circular, CIMC Raffles does not expect the above timetable to be modified. However, CIMC Raffles may modify the above timetable subject to any limitation under any applicable laws. In such an event, CIMC Raffles will publicly announce the same through an announcement to be posted on CIMC Raffles website at http://www.cimc-raffles.com and, where permitted, the website of the Norwegian Securities Dealers Association at http://www.nfmf.no. 7
LETTER FROM THE BOARD 15 July 2010 Directors: Mai Bo Liang (Chairman) Brian Chang (Deputy Chairman and Chief Executive Officer) Chang Yee Meng Malcolm (Executive Director) Yu Ya (Executive Director) Yu Yu Qun (Executive Director) Wang Yu (Executive Director) Liu Chee Ming (Independent Director) Yu Ning (Independent Director) Zhang Li Min (Independent Director) Registered Office: 1 Claymore Drive #08-04 Orchard Tower Rear Block Apartment Singapore 229594 Dear Shareholders, RIGHTS ISSUE TO RAISE GROSS PROCEEDS OF US$100.5 MILLION 1. Introduction On 5 July 2010, we announced a capital raising through the Rights Issue to raise gross proceeds of approximately US$100.5 million. Under the Rights Issue, Entitled Shareholders will be entitled to subscribe for one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date at the Issue Price of US$0.735 for each Rights Share. 2. Rationale 2.1 Rationale The Rights Issue is being undertaken by CIMC Raffles to raise funds to improve the facilities at its existing shipyards and to build new shipyards, to strengthen its balance sheet structure, and for future investments and working capital requirements. 2.2 To improve facilities at existing shipyards and to build new shipyards CIMC Raffles has a vision to develop itself into a yard of choice with state-of-the-art construction infrastructure for building offshore marine facilities. CIMC Raffles believes its existing innovative yard facilities have attracted considerable interest from both present and potential clients. One of CIMC Raffles key strategies is to continue to improve its facilities to enhance its competitive advantage. CIMC Raffles believes that these investments will reap tremendous benefits for the CIMC Raffles Group, enabling it to increase its production capacity, and improve efficiency and safety standards. CIMC Raffles planned investments in capital expenditure include the second phase of an 18-metre deepwater wharf at its main shipyard located in Yantai, Shandong, which will give CIMC Raffles a significant competitive advantage in building semi-submersible drilling rigs, floating production storage and offloading (FPSO) vessels, floating production unit vessels and other similar vessels. At its shipyard located in Haiyang, Shandong, workshops will be built to enable more construction work to be performed under shelter which minimises the effect of adverse weather on production. A newly acquired shipyard in Longkou, Shandong, will also be developed into a world-class construction yard for building jack-up drilling rigs. The Rights Issue will provide part of the funds required by CIMC Raffles to improve the facilities at its existing shipyards and to build new shipyards. 8
LETTER FROM THE BOARD 2.3 To strengthen the balance sheet structure of CIMC Raffles The Board recognises the need to strengthen the balance sheet structure of CIMC Raffles so as to ensure that the CIMC Raffles Group remains competitive in the industry and is able to better respond to new business opportunities when they arise. CIMC Raffles operates in a capital intensive industry. Besides heavy capital investment in yard infrastructure, the construction of an offshore marine facility typically spans a period of 18 to 50 months and requires significant resources. A strong balance sheet structure is essential to enable the CIMC Raffles Group to secure the required banking facilities (including but not limited to project bank loans and bonds, working capital facilities and fixed assets loans, trade facilities, foreign currency facilities and interest rate swap facilities) for the purpose of its operations and expansion on favourable and competitive terms. In this regard, the Rights Issue will strengthen the balance sheet of CIMC Raffles. Part of the proceeds from the Rights Issue will also be used to repay some of the existing borrowings of the CIMC Raffles Group. The improved balance sheet structure of CIMC Raffles is expected to enhance its ability to win new orders and secure corresponding project financing. 2.4 Future investments and working capital The Rights Issue will provide funds for future investments and the working capital requirements of the CIMC Raffles Group. Future investments will be made as and when opportunities are identified and as and when the Board deems appropriate, and may include strategic joint ventures with third parties with a view to developing and expanding the CIMC Raffles Group s market, partnership with significant players in the supply chain in the offshore marine facilities industry, and construction or purchase of oil drilling rigs or other offshore marine facilities to be leased to third parties. In particular, CIMC Raffles and Far Eastern Shipbuilding and Repair Center, a Russian shipbuilding company, have jointly incorporated a joint venture company in Russia with a view to constructing a shipyard in Primorsky, Russia. Part of the net proceeds of the Rights Issue may be used for the injection of equity into the joint venture company. 3. Value Proposition for Shareholders 3.1 The capital raising is undertaken through a rights issue which would enable Entitled Shareholders to maintain their proportionate shareholdings in CIMC Raffles. 3.2 The Issue Price represents a discount of approximately: (a) (b) (c) 5.6% to the last transacted price of NOK5 per Share on the NOTC before the Announcement Date 1 ; 3.9% to the theoretical ex-rights price 2 of NOK4.91 per Share 1 ; and 43.9% to CIMC Raffles pro forma post-rights Issue NAV of approximately S$1.83 per Share. 1 2 Computed based on the exchange rate of US$1.00:NOK6.4229. The theoretical ex-rights price is the theoretical transacted price of each Share assuming the completion of the Rights Issue, and is calculated based on the last transacted price of NOK5 per Share on the NOTC before the Announcement Date and the number of Shares following completion of the Rights Issue. As at the Announcement Date, only 131,299,700 Shares, out of a total of 273,565,000 issued Shares, are registered in the VPS and traded on the NOTC. 9
LETTER FROM THE BOARD 3.3 The Rights Issue is renounceable and Entitled Shareholders who do not wish to subscribe for the Rights Shares may choose to renounce their Rights (in the case of Entitled Registered Shareholders) or sell their VPS Subscription Rights on the NOTC (in the case of Entitled VPS Shareholders). In addition, Entitled Shareholders may apply or subscribe for additional Rights Shares in excess of their entitlements under the Rights Issue. 3.4 The Board believes that the Rights Issue is in the best interests of shareholders and the CIMC Raffles Group as a whole. 4. Principal Terms of Rights Issue 4.1 The Rights Shares will be offered to Entitled Shareholders on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date. Based on the total number of 273,565,000 issued Shares as at the Latest Practicable Date, and assuming that no new Shares will be issued after the Latest Practicable Date and before the Books Closure Date, an aggregate of 136,782,500 Rights Shares will be allotted and issued pursuant to the Rights Issue. 4.2 The issue of the Rights Shares will be made pursuant to the authority granted under the terms of the general share issue mandate approved by Registered Shareholders at the Annual General Meeting of CIMC Raffles held on 11 June 2010. 4.3 The Rights Shares will, upon allotment and issue, rank pari passu in all respects with the existing Shares, save for any dividends, rights, allotments or other distributions, the record date for which falls before the date of issue of the Rights Shares. 5. Financial Effects After the completion of the Rights Issue: (a) the total number of issued Shares will increase from 273,565,000 Shares to 410,347,500 Shares, and the total issued and paid-up share capital of CIMC Raffles will increase from S$594,416,915 3 to S$734,552,843; (b) (c) (d) the earnings per Share (based on the audited profit net of tax after minority interest for FY2009) will decrease from approximately 9.99 Singapore cents to approximately 6.66 Singapore cents; the NAV per Share (based on the audited NAV as at 31 December 2009) will be reduced from approximately S$2.23 to approximately S$1.83; and the gearing of the CIMC Raffles Group will be reduced from approximately 1.18 as at 31 December 2009 to approximately 0.77. Please see paragraph 4 on Financial Effects of the Rights Issue in the section Operating and Financial Review and Prospects of this Offering Circular for further information. 3 Based on filings made with the Accounting and Corporate Regulatory Authority of Singapore. 10
LETTER FROM THE BOARD 6. Irrevocable Undertaking As at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly approximately 81.96% of the total number of issued Shares. CIMC Offshore Holdings has given the Irrevocable Undertaking to CIMC Raffles, pursuant to which it undertook to accept and pay for its provisional allotments of the Rights Shares under the Rights Issue in full, and to apply and pay for all excess Rights Shares which are not allotted or otherwise taken up under the Rights Issue. CIMC Offshore Holdings will rank last in priority in the allocation of excess Rights Shares. In view of the Irrevocable Undertaking, the Rights Issue is not underwritten by any financial institution. 7. What you need to do 7.1 The last time and date for acceptances of and (if applicable) excess applications and payment for the Rights Shares by Entitled Registered Shareholders is 5.00 p.m. on 2 August 2010. The last time and date for Entitled VPS Shareholders to trade their VPS Subscription Rights on the NOTC is 4.30 p.m. on 26 July 2010, Norwegian time. The last time and date for Entitled VPS Shareholders to subscribe for the Rights Shares (including, if applicable, subscription for excess Rights Shares) pursuant to the VPS Subscription Rights is 4.30 p.m. on 26 July 2010, Norwegian time. The procedures, and terms and conditions, for acceptances, excess applications and payment by Entitled Registered Shareholders, and for subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) by Entitled VPS Shareholders, are set out in Appendices D and E respectively to this Offering Circular. 7.2 If you are in any doubt as to the action you should take, you should immediately seek your own financial or other advice from your stockbroker, bank manager, solicitor or other independent professional adviser. 7.3 Your attention is drawn to the other information contained in this Offering Circular (of which this letter forms a part). Please note that you are advised to read this Offering Circular in its entirety and not rely solely on the summary information contained in this letter. Yours faithfully, Mai Bo Liang Chairman CIMC Raffles Offshore (Singapore) Limited 11
SUMMARY OF RIGHTS ISSUE The following is a summary of the principal terms and conditions of the Rights Issue and is derived from, and should be read in conjunction with, the full text of this Offering Circular, and is qualified in its entirety by reference to information appearing elsewhere in this Offering Circular. Basis of Provisional Allotment : The Rights Issue is made on a renounceable non-underwritten basis to Entitled Shareholders on the basis of one (1) Rights Share for every two (2) existing Shares held as at the Books Closure Date, rounded down to the nearest Rights Share. Issue Price : US$0.735 for each Rights Share. Discount : The Issue Price represents a discount of approximately: (a) 5.6% to the last transacted price of NOK5 per Share on the NOTC before the Announcement Date 4 ; (b) 3.9% to the theoretical ex-rights price 5 of NOK4.91 per Share 4 ; and (c) 43.9% to CIMC Raffles pro forma post-rights Issue NAV of approximately S$1.83 per Share. Rationale and Use of Proceeds : The Rights Issue is being undertaken by CIMC Raffles to raise funds to improve the facilities at its existing shipyards and to build new shipyards, to strengthen its balance sheet structure, and for future investments and working capital requirements. Please see the section Use of Proceeds of this Offering Circular for further information. Number of Rights Shares to be issued : 136,782,500 Rights Shares to be allotted and issued, based on the total number of 273,565,000 issued Shares as at the Latest Practicable Date and assuming that no Shares will be issued pursuant to the exercise of outstanding Share Options after the Latest Practicable Date but before the Books Closure Date. The issue of the Rights Shares will be made pursuant to the authority granted under the terms of the general share issue mandate approved by Registered Shareholders at the Annual General Meeting of CIMC Raffles held on 11 June 2010. Estimated Net Proceeds : Based on the total number of 273,565,000 issued Shares as at the Latest Practicable Date, the Rights Issue will raise gross proceeds of approximately US$100.5 million, and the estimated net proceeds of the Rights Issue after deducting estimated expenses of approximately US$0.2 million are expected to be approximately US$100.3 million. 4 5 Computed based on the exchange rate of US$1.00:NOK6.4229. The theoretical ex-rights price is the theoretical transacted price of each Share assuming the completion of the Rights Issue, and is calculated based on the last transacted price of NOK5 per Share on the NOTC before the Announcement Date and the number of Shares following completion of the Rights Issue. As at the Announcement Date, only 131,299,700 Shares, out of a total of 273,565,000 issued Shares, are registered in the VPS and traded on the NOTC. 12
SUMMARY OF RIGHTS ISSUE Status of the Rights Shares Eligibility to Participate in the Rights Issue Acceptance, Excess Application and Payment by Entitled Registered Shareholders : The Rights Shares will, upon allotment and issue, rank pari passu in all respects with the existing Shares, save for any dividends, rights, allotments or other distributions, the record date for which falls before the date of issue of the Rights Shares. : Please refer to the section Eligibility of Shareholders to Participate in the Rights Issue of this Offering Circular. : Entitled Registered Shareholders will be at liberty to accept, decline or otherwise renounce their Rights and will be eligible to apply for additional Rights Shares in excess of their provisional allotments under the Rights Issue using the PAL during the Registered Shareholders Subscription Period. The Rights of Entitled Registered Shareholders will not be traded on the NOTC. Only the VPS Subscription Rights will be traded on the NOTC. Accordingly, the PALs which are issued to Entitled Registered Shareholders will not be valid for delivery pursuant to trades done on the NOTC. The procedures for, and terms and conditions applicable to, acceptance, excess application and payment by Entitled Registered Shareholders are set out in Appendix D to this Offering Circular and the PAL. Trading of VPS Subscription Rights and subscription for Rights Shares by Entitled VPS Shareholders : Entitled VPS Shareholders may trade their VPS Subscription Rights on the NOTC during the NOTC Trading Period. Entitled VPS Shareholders may subscribe for their entitlements to the Rights Shares as well as apply for additional Rights Shares in excess of their entitlements during the VPS Subscription Period. All subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) pursuant to the VPS Subscription Rights is to be made through the VPS Registrar on the VPS Subscription Form during the VPS Subscription Period. The procedures for, and terms and conditions applicable to, the subscription for the Rights Shares (including, if applicable, subscription for excess Rights Shares) pursuant to the VPS Subscription Rights are set out in Appendix E to this Offering Circular and the VPS Subscription Form. Excess Rights Shares : Disregarded fractional entitlements of Rights Shares will be aggregated with entitlements to the Rights Shares which are not allotted or otherwise taken up for any reason and shall be used to satisfy excess applications or subscriptions for Rights Shares (if any) or otherwise disposed of or dealt with in such manner as the Directors may in their absolute discretion deem fit in the interests of CIMC Raffles. In the allotment of excess Rights Shares applied for through the Share Registrar using the PAL, Substantial Shareholders and Directors will rank last. 13
SUMMARY OF RIGHTS ISSUE Trading of the Rights Shares : The Rights Shares to be allotted and issued to the VPS Registrar as nominee for the VPS Shareholders will be registered in the VPS and traded on the NOTC. Please see Appendix E to this Offering Circular for further information. Irrevocable Undertaking : CIMC Offshore Holdings holds directly and indirectly approximately 81.96% of the total number of issued Shares as at the Latest Practicable Date and has given to CIMC Raffles the Irrevocable Undertaking, pursuant to which it undertook to accept and pay for its provisional allotments of the Rights Shares under the Rights Issue in full, and to apply and pay for all excess Rights Shares which are not allotted or otherwise taken up under the Rights Issue. In the allotment of excess Rights Shares, CIMC Offshore Holdings will rank last. Governing Law : Laws of Singapore In view of the Irrevocable Undertaking, the Rights Issue is not underwritten by any financial institution. Please see paragraph 4.6 of the section Additional Information on the Rights Issue of this Offering Circular for further information. 14
SUMMARY OF THE BUSINESS OF THE CIMC RAFFLES GROUP This summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all the information that may be important to an investor before deciding to invest in the Rights, the VPS Subscription Rights or the Rights Shares. Investors should read this entire Offering Circular carefully and the section Risk Factors before making an investment decision. OVERVIEW OF THE CIMC RAFFLES GROUP CIMC Raffles was incorporated on 7 March 1994 in Singapore under the Companies Act as a private limited company under the name of The China Gas & Power Corporation Pte Ltd which was subsequently changed to Ansalventure Pte Ltd and then to Taisun Shipyard Pte Ltd. On 7 October 1997, its name was further changed to Yantai Raffles Shipyard Pte. Ltd. Subsequently, it was converted to a public limited company on 28 April 2006 and its name was changed to Yantai Raffles Shipyard Limited. CIMC Raffles adopted its present name, CIMC Raffles Offshore (Singapore) Limited, on 11 June 2010, to reflect that CIMC has become the indirect controlling shareholder of CIMC Raffles following the voluntary unconditional cash offer described below. The CIMC Raffles Group is one of the largest offshore shipyards in the PRC, and also carries on other related business as mentioned below. It carries on its operations primarily in shipyards located in the PRC. The Shares have been traded on the NOTC since 2006. In November 2008, CIMC completed the acquisition of its initial 10% stake in CIMC Raffles, and subsequently increased its stake in CIMC Raffles to approximately 18.3% through open market purchases on the NOTC. Pursuant to a voluntary unconditional cash offer for CIMC Raffles by CIMC Offshore Holdings launched in November 2009 and which closed in January 2010, and certain transactions between entities controlled by CIMC and entities controlled by Mr Brian Chang, CIMC is now the controlling shareholder of CIMC Raffles. As at the Latest Practicable Date, CIMC Offshore Holdings holds directly and indirectly approximately 81.96% of the total number of issued Shares, and CIMC Offshore Holdings is in turn controlled indirectly as to approximately 61.02% by CIMC and indirectly as to approximately 38.98% by Mr Brian Chang. CIMC was incorporated in 1980 in Shenzhen, PRC, and was listed on the Shenzhen Stock Exchange in 1994. CIMC is a leading manufacturer and supplier of containers, trailers, tank equipment, petrol chemical equipment, transportation, liquid natural gas and airport boarding bridges. It has over 100 subsidiaries in China, North America, Europe, Asia and Australia. BUSINESS OF THE CIMC RAFFLES GROUP The CIMC Raffles Group operates one of the largest offshore shipyards in the PRC. The CIMC Raffles Group designs and builds facilities for the offshore oil and gas and international marine industry. The CIMC Raffles Group is able to produce a wide range of offshore marine facilities, including semi-submersible drilling rigs, jack-up drilling rigs, heavy lift carriers, pipelay vessels, fall pipe vessels, accommodation barges, platform supply vessels, floating production storage and offloading vessels, floating storage and offloading vessels, permanent floating production units and anchor handling supply tug vessels. The main shipyard of the CIMC Raffles Group, which is held through Yantai CIMC Raffles Shipyard Co., Ltd and Yantai CIMC Raffles Offshore Ltd, is located in Yantai, Shandong and spans more than 425,000 square metres. The Yantai shipyard is equipped with large state-of-the-art offshore marine construction infrastructure, including the dual-beam gantry crane Taisun ( ), which is the world s largest crane with a lifting capacity of 20,000 metric tonnes and has won several engineering and technological awards as well as achieved one of the world s heaviest weight lifted by a crane. 15