FEDERAL INTERNATIONAL (2000) LTD

FEDERAL INTERNATIONAL (2000) LTD
(Incorporated in the Republic of Singapore)
Company Registration No. 199907113K
(the “Company”)
RENOUNCEABLE RIGHTS ISSUE OF UP TO 377,194,378 NEW ORDINARY SHARES
(“RIGHTS SHARES”) IN THE CAPITAL OF THE COMPANY, AT AN ISSUE PRICE OF S$0.08
FOR EACH RIGHTS SHARE, ON THE BASIS OF SEVEN (7) RIGHTS SHARES FOR EVERY
10 EXISTING ORDINARY SHARES, FRACTIONAL ENTITLEMENTS BEING DISREGARDED
(“RIGHTS ISSUE”)
– ADDITIONAL UNDERTAKING SHAREHOLDER
– APPOINTMENT OF UNDERWRITER AND PARTIAL UNDERWRITING OF THE RIGHTS
ISSUE
1 INTRODUCTION
The Board of Directors (the “Board”) of Company refers to its announcement made on 14
August 2010 in relation to the above matter (the “Previous Announcement”).
All capitalised terms and references used in this Announcement shall, unless otherwise
defined herein, have the same meaning ascribed to them in the Previous Announcement.
2 UNDERTAKING BY MR. YANG YI-CHUNG
The Board is pleased to announce that in addition to the Letters of Undertaking issued by
each of Mr. Koh Kian Kiong (“KKK”) and Fame Asia Limited (‘Fame”) in favour of the
Company and the Manager and Underwriter (as defined below), Mr. Yang Yi-Chung (“YYC”
or the “Sub-Underwriter” and collectively with KKK and Fame, the “Undertaking
Shareholders”) has also issued a letter of undertaking in favour of the Company and the
Manager and Underwriter (“Additional Undertaking” and collectively with the Letters of
Undertaking provided by KKK and Fame, the “Letters of Undertaking”) in support of the
Rights Issue.
To demonstrate his commitment to the Company, YYC has, pursuant to the Additional
Undertaking, undertaken that, among others:-
a) he will maintain his interests in an aggregate of not less than 30,192,058 Shares until
the issue of the Rights Shares under the Rights Issue; and
b) he will subscribe for all the Rights Shares that he is entitled to subscribe for under the
Rights Issue at the Issue Price, amounting to 21,134,440 Rights Shares.
As at the date of this Announcement, YYC is a substantial shareholder of the Company
holding directly and/or indirectly, an aggregate of 30,192,058 Shares representing
approximately 5.60% of the total issued and paid-up capital of the Company.
In view of this, the Undertaking Shareholders have undertaken to subscribe for a total
number of 121,629,703 Rights Shares (the “Undertaking Shares’).
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3 CONFIRMATION OF FINANCIAL RESOURCES
The Undertaking Shareholders have delivered to the Company letters issued by financial
institutions to the SGX-ST confirming that the Undertaking Shareholders will have sufficient
financial resources to fulfill their respective obligations under the relevant Letters of
Undertaking (“Confirmation of Financial Resources Letters”).
The Confirmation of Financial Resources Letters will be submitted by the Manager and
Underwriter to SGX-ST in due course.
4 UNDERWRITING AND SUB-UNDERWRITING ARRANGEMENT
The Board is also pleased to announce that it has successfully arranged for DMG & Partners
Securities Pte Ltd (the “Manager and Underwriter”) to partially underwrite the Rights Issue.
The Company has entered into an underwriting agreement (the “Underwriting Agreement”)
with the Manager and Underwriter, to underwrite up to 75,000,000 Rights Shares, other than
the Undertaking Shares (the “Underwritten Shares”).
In consideration of the Manager and Underwriter’s agreement to underwrite the Underwritten
Shares, the Company will pay the Manager and Underwriter an underwriting fee of 3.95% of
the aggregate amount of the Issue Price of the Underwritten Shares.
The Manager and Underwriter advised in writing that it will partially underwrite the
Underwritten Shares on condition that the Sub-Underwriter will enter into a sub-underwriting
arrangement with the Manager and Underwriter (the “Sub-Underwriting Arrangement”)
pursuant to which, among others, the Sub-Underwriter will agree to sub-underwrite up to
S$4 million worth of Rights Shares representing 50,000,000 Rights Shares (“Committed
Allocated Rights Shares”).
In consideration of the sub-underwriting commitment given by the Sub-Underwriter, the
Manager and Underwriter has agreed to pay to the Sub-Underwriter a sub-underwriting fee
equal to 3.50% of the aggregate amount of the Issue Price of the Committed Allocated
Rights Shares.
5 REVISED MINIMUM SUBSCRIPTION AMOUNT
In view of the above and assuming that only the Undertaking Shareholders subscribe in full
for the Undertaking Shares and that the Underwritten Shares are allotted and issued in full to
the Manager and Underwriter, an aggregate of 196,629,703 new Shares will be issued
pursuant to the Rights Issue (the “Minimum Subscription Scenario”).
Consequently, under the Minimum Subscription Scenario, the Company expects to raise
approximately S$15.25 million after deducting estimated expenses of approximately
S$482,000.
6 BOARD CONFIRMATION
The Board has considered the terms of the Underwriting Agreement and is unanimously of
the view that the terms of the Underwriting Agreement have been entered into on an arm’s
length basis and are on normal commercial terms.
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The Board noted that the sub-underwriting fee to the Sub-Underwriter will be paid by the
Manager and Underwriter out of its underwriting commission and will not lead to an
additional cost to the Company over and above the underwriting commission payable to the
Manager and Underwriter.
The Board also noted that the Manager and Underwriter has confirmed that they had
initiated the discussions for the Sub-Underwriting Arrangement with the Sub-Underwriter and
that they would not proceed to partially underwrite the Rights Issue unless, among other
things, the Sub-Underwriter entered into the Sub-Underwriting Arrangement.
Accordingly, the Board is unanimously of the view that the underwriting structure for the
Rights Issue, including the Sub-Underwriting Arrangement between the Manager and
Underwriter and the Sub-Underwriter as described above and the fees payable to the
Manager and Underwriter and the Sub-Underwriter, is fair, on arm’s length and normal
commercial terms and not prejudicial to the interests of the Company and the other
Shareholders.
None of the Directors dissented in arriving at the above opinion.
7 INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
Arfat Selvam Alliance LLC are the legal advisers to the Company in relation to the Rights Issue.
Mr. Yee Kee Shian Leon, one of the independent Directors of the Company, is also a Director at
Arfat Selvam Alliance LLC.
Save as disclosed in this Announcement, none of the Directors of the Company or the
substantial Shareholders have an interest, direct or indirect, in the Rights Issue other than
through their respective shareholding interests, direct and/or indirect, in the Company.
8 RESPONSIBILITY STATEMENT
The Directors (including any Director who may have delegated detailed supervision of the
preparation 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.
BY ORDER OF THE BOARD
Maggie Koh
Executive Director
15 September 2010
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