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Interests — Present and Ongoing Interested Person Transactions — Inter-company Balances Between Us and
Brizill International, Advances to Us From Brizill International and the Brizill Term Loan” and “Interested
Person Transactions and Conflicts of Interests — Present and Ongoing Interested Person Transactions —
Personal Guarantee and Other Undertaking Provided by Yaw Chee Siew”.
Refund Guarantees
As at 31 May 2008, banks had issued refund guarantees to our customers for an aggregate amount of
US$135.9 million and Euros 17.3 million under restricted bank account arrangements in connection with
shipbuilding contracts we had entered into with these customers. As at 31 December 2007 and 31 May 2008,
we had restricted fixed deposits in banks to support refund guarantees issued by banks to our customers of
S$195.7 million and S$151.2 million, respectively. As at 31 December 2005 and 2006, we had restricted fixed
deposits of nil and S$40.8 million, respectively, in banks to support refund guarantees.
Our obligations to banks in respect of refund guarantees issued by them to our customers are not
generally required to be recognised as liabilities on our balance sheet. Other than the refund guarantees, we do
not have any other off-balance sheet arrangements that we believe have or are reasonably likely to have a
material effect on our business, financial condition, results of operations or prospects.
In particular, the refund guarantee facility from Standard Chartered Bank is subject to the condition that
Yaw Chee Siew maintains no less than a 30% interest in our Company.
As at the Latest Practicable Date, banks had issued refund guarantees to our customers for an aggregate
amount of US$122.7 million and Euros 29.3 million under restricted bank account arrangements in connection
with shipbuilding contracts we had entered into with these customers.
Past Loan Default
In 1996, Sumikin Bussan Corporation (“Sumikin”), an unrelated third party, extended a loan of Yen
950.0 million to us secured against the personal guarantees of our former directors, Yaw Teck Seng and
Taikichi Ito (the “Guarantors”) for the construction of a Syncrolift@ facility at our shipyard in Batam,
Indonesia.
We encountered difficulties in meeting our payment obligations under the loan and arising from this, we
agreed with Sumikin to a debt restructuring in 1999 and again on two other occasions in 2001. In 2003,
Sumikin filed letters of demand against us, the amounts of which we disputed. In 2004, Sumikin filed a claim
against the Guarantors. In 2005, Sumikin, the Guarantors and we agreed to a settlement of the dispute. We
paid the full settlement sum of US$6.3 million between July 2005 and April 2006 and were fully discharged.
In 1998, HSBC Bank extended certain trade finance facilities to us for our business secured against,
among others, the personal guarantees jointly provided by our former directors Yaw Teck Seng, Yaw Chee
Ming and Taikichi Ito.
In 1999, we encountered difficulties in meeting our payment obligations of S$2,464,405 (“Tranche A”)
and Yen 249,000,000 (“Tranche B”) under these facilities and arising from this, we agreed with HSBC Bank
to a debt restructuring in 1999 (“1999 Repayment Schedule”) under which we successfully repaid Tranche A
in accordance with the 1999 Repayment Schedule. However, we failed to observe the 1999 Repayment
Schedule in relation to Tranche B and we only paid part of it. In 2001, HSBC Bank agreed with us to revise
the 1999 Repayment Schedule for the outstanding sum of Yen 207,500,000 under Tranche B (“2001
Repayment Schedule”).
In order to manage our cashflow position, we requested that HSBC Bank grant us a six-week grace
period for each repayment instalment under the 2001 Repayment Schedule. HSBC Bank acceded to our
request and we made the instalment payments within the applicable grace periods. We made the last instalment
payment for Tranche B on 31 March 2004.
In FY2005, we breached one of the financial covenants under a facility provided by Bank Mandiri, under
which we owed US$9.0 million as at 31 December 2005. Under the terms of the facility, we were required to
maintain a debt to equity ratio of 2.33 times. As at 31 December 2005 the ratio was 2.35 times. The loan was
fully repaid in FY2006.
Since Yaw Chee Siew became the Executive Chairman of our Company in 2001, our management team
and reporting structures have gone through major changes. Most of the current key executive officers are new
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