FEDERAL INTERNATIONAL (2000) LTD 
By
(the "Company")
(Incorporated in the Republic of Singapore)
Company Registration No. 199907113K
PROPOSED RENOUNCEABLE UNDERWRITTEN RIGHTS ISSUE OF UP TO 458,021,745 NEW ORDINARY SHARES IN THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY, AT AN ISSUE PRICE OF S$0.022 FOR EACH RIGHTS SHARE, ON THE BASIS OF ONE (1) RIGHTS SHARE FOR EVERY TWO (2) EXISTING ORDINARY SHARES IN THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY HELD AS AT BOOKS CLOSURE DATE (AS DEFINED BELOW), FRACTIONAL ENTITLEMENTS TO BE DISREGARDED 1 INTRODUCTION
The board of directors (the "Directors") of Federal International (2000) Ltd (the "Company" and collectively with its subsidiaries, the "Group") wishes to announce that the Company is proposing to undertake a renounceable underwritten rights issue of up to 458,021,745 new ordinary shares (the "Rights Shares") in the issued and paid-up share capital of the Company at an issue price of S$0.022 for each Rights Share (the "Issue Price"), on the basis of one (1) Rights Share for every two (2) existing ordinary shares in the issued and paid-up share capital of the Company (the "Shares") held by shareholders of the Company (the "Shareholders") at a time and date to be determined by the Directors for the purposes of determining the Shareholders' entitlements under the rights issue (the "Books Closure Date"), fractional entitlements to be disregarded (the "Rights Issue").
The Company has appointed DMG & Partners Securities Pte Ltd as the manager and underwriter to the Rights Issue (the "Manager and Underwriter").
The Rights Shares will be issued under the share issue mandate approved by the
Shareholders at the Company's annual general meeting held on 30 April 2012.
The Rights Issue will be offered on a renounceable basis to all Shareholders who are eligible to participate in the Rights Issue (the "Entitled Shareholders") on the basis of one (1) Rights Share for every two (2) existing Shares held by Entitled Shareholders as at the Books Closure Date at the Issue Price, fractional entitlements to be disregarded.
The Issue Price of S$0.022 for each Rights Share represents a discount of approximately
54.2% to the closing price of S$0.048 per Share on the Official List of the Main Board of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 27 December 2012, being the last SGX-ST Market Day (as defined below) on which the Shares were traded immediately preceding this Announcement. "Market Day" means a day on which the SGX- ST is open for trading in securities.
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The Rights Shares are payable in full upon acceptance and/or application and will, upon allotment and issue, rank pari passu in all respects with the then existing issued Shares, except for any dividends, rights, allotments or other distributions, the record date for which falls before the date of issue of the Rights Shares. For this purpose, "record date" means, in relation to any dividends, rights, allotments or other distributions, the date as at the close of business (or such other time as may have been notified by the Company) on which Shareholders must be registered with The Central Depository (Pte) Limited ("CDP") or the Company, as the case may be, in order to participate in such dividends, rights, allotments or other distributions.
Entitled Shareholders will be entitled to participate in the Rights Issue and receive an offer information statement to be issued by the Company ("OIS") and lodged with the Monetary Authority of Singapore ("MAS") together with the appropriate application forms and accompanying documents at their respective Singapore addresses.
The Company proposes to provisionally allot Rights Shares to all Entitled Shareholders, comprising the Entitled Depositors and Entitled Scripholders (both as defined below).
"Entitled Depositors" are Shareholders with Shares standing to the credit of their securities accounts with CDP and whose registered addresses with CDP are in Singapore as at the Books Closure Date or who have, at least three (3) Market Days prior to the Books Closure Date, provided CDP with addresses in Singapore for the service of notices and documents.
"Entitled Scripholders" are Shareholders whose share certificates are not deposited with CDP and who have tendered to the share registrar of the Company, B.A.C.S. Private Limited (the "Share Registrar"), valid transfers of their Shares and the certificates relating thereto for registration up to the Books Closure Date and whose registered addresses with the Company are in Singapore as at the Books Closure Date or who have, at least three (3) Market Days prior to the Books Closure Date, provided the Share Registrar with addresses in Singapore for the service of notices and documents.
Entitled Shareholders will be at liberty to accept, decline or otherwise renounce or trade their provisional allotments of the Rights Shares and will be eligible to apply for additional Rights Shares in excess of their provisional allotments under the Rights Issue. Fractional entitlements to the Rights Shares will be disregarded in arriving at the Shareholders' entitlements and will, together with the provisional allotments which are not taken up for any reason, be aggregated and used to satisfy excess applications (if any), or disposed of or otherwise dealt with in such manner as the Directors may, in their absolute discretion, deem fit for the benefit of the Company. In the allotment of excess Rights Shares, preference will be given to Shareholders for rounding of odd lots, and substantial Shareholders and Directors will rank last in priority.
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For practical reasons and in order to avoid any violation of the securities legislation applicable in countries other than Singapore, the Rights Issue is only made in Singapore and the Rights Shares will NOT be offered to Shareholders with registered addresses outside Singapore as at the Books Closure Date and who have not, at least three (3) Market Days prior to the Books Closure Date, provided CDP or the Share Registrar, as the case may be, with addresses in Singapore for the service of notices and documents ("Foreign Shareholders"). The OIS to be issued in relation to and for the purposes of the Rights Issue and the accompanying documents will not be mailed outside Singapore.
To the extent that it is practicable to do so, arrangements may, at the absolute discretion of the Company, be made for the provisional allotments of Rights Shares, which would otherwise have been provisionally allotted to Foreign Shareholders, to be sold "nil-paid" on the SGX-ST as soon as practicable after dealings in the provisional allotments of Rights Shares commence. Such sales may, however, only be effected if the Company, in its absolute discretion, determines that a premium can be obtained from such sales, after taking into account the expenses expected to be incurred. The net proceeds from all such sales (after deducting any applicable brokerage, commissions and expenses, including goods and services tax), will be aggregated and thereafter distributed to the Foreign Shareholders in proportion to their respective shareholdings or, as the case may be, the number of Shares entered against their names in the Depository Register as at the Books Closure Date and sent to them at their own risk by ordinary post, provided that where the amount of net proceeds to be distributed to any single Foreign Shareholder is less than S$10.00, the Company shall be entitled to retain or deal with such net proceeds as the Directors may, in their absolute discretion, deem fit and no Foreign Shareholder shall have any claim whatsoever against the Company, the Manager and Underwriter, CDP or their respective officers in connection therewith. Where such provisional allotments of Rights Shares are sold "nil-paid" on the SGX-ST, they will be sold at such price or prices as the Company may, in its absolute discretion, decide and no Foreign Shareholder shall have any claim whatsoever against the Company, the Manager and Underwriter, CDP or their respective officers in respect of such sales or the proceeds thereof, the provisional allotments of Rights Shares or the Rights Shares represented by such provisional allotments.
As at the date hereof, the existing issued and paid-up share capital of the Company consists of 916,043,490 Shares (the "Existing Share Capital").
Based on the Existing Share Capital, an aggregate of 458,021,745 new Shares will be issued pursuant to the Rights Issue.
The Company is proposing to undertake the Rights Issue to strengthen its balance sheet and improve the working capital position of the Group.
The Company expects to raise approximately S$9.6 million ("Net Proceeds") after deducting estimated expenses of approximately S$475,000.
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The Company intends to utilise the Net Proceeds as follows:
(i) approximately up to S$7.0 million representing 72.9% of the Net Proceeds, for purposes of paying down existing term loans and reducing the levels of leverage of the Group; and
(ii) the balance of up to S$2.6 million representing 27.1% of the Net Proceeds will be utilised for the Group's general corporate and working capital purposes.
In support of the Rights Issue, each of Mr. Koh Kian Kiong ("KKK"), Fame Asia Limited ("Fame") and Mr. Yang Yi-Chung ("YYC") and collectively with KKK and Fame, the "Undertaking Shareholders"), have irrevocably undertaken to subscribe for their respective entitlements under the Rights Issue, pursuant to letters of undertaking issued in favour of the Company and the Manager and Underwriter (each a "Letter of Undertaking" and collectively, the "Letters of Undertaking").
Pursuant to the Letters of Undertaking, the Undertaking Shareholders have collectively, irrevocably undertaken to subscribe for an aggregate of 147,693,210 Rights Shares, being their pro-rata entitlements for Rights Shares.
In addition, YYC has, pursuant to his Letter of Undertaking, undertaken to apply and pay in full for up to 90,909,090 excess Rights Shares (other than the 147,693,210 Rights Shares, being the total pro-rata entitlement of the Undertaking Shareholders), aggregating to S$2.0 million in value of the gross proceeds to be raised from the Rights Issue (the "Undertaking Excess Rights Shares").
In addition and pursuant to their respective Letters of Undertaking, each Undertaking
Shareholder has, undertaken that it/he:-
(i) will maintain its/his respective current interests in Shares until the issue of the
Rights Shares under the Rights Issue; and
(ii) will subscribe for all the Rights Shares that it/he is entitled to subscribe for under the Rights Issue at the Issue Price.
Each Undertaking Shareholder has provided a confirmation of financial resources to fulfill its/his obligations under its/his Letter of Undertaking.
The Rights Issue will be underwritten by the Manager and Underwriter pursuant to the terms of a management and underwriting agreement (the "Management and Underwriting Agreement").
In consideration for the Manager and Underwriter's agreement to subscribe for and/or procure subscriptions of up to 310,328,535 Rights Shares or approximately 67.8% of the Rights Issue (the "Underwritten Rights Shares"), the Company will pay the Manager and Underwriter, inter alia, an underwriting commission of:
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(i) 1.0% of the Issue Price multiplied by the number of Undertaking Excess Rights
Shares; and
(ii) 3.5% of the Issue Price multiplied by the number of Underwritten Rights Shares less the number of Undertaking Excess Rights Shares.
In addition, the Manager and Underwriter will be entitled to a manager fee of S$80,000.
The underwriting commitment of the Manager and Underwriter under the Management and
Underwriting Agreement is conditional upon, inter alia:
a. the approval in-principle having been granted by the SGX-ST (and such approval not having been withdrawn or revoked on or prior to the closing date of the Rights Issue) for the listing and quotation of the Rights Shares on the Official List of the SGX-ST and, if such approval is granted subject to conditions, such conditions being acceptable to the Company and the Manager and Underwriter;
b. the lodgement of the OIS with MAS in accordance with Section 277 of the
Securities and Futures Act, Chapter 289 of Singapore; and
c. the Undertaking Shareholders having performed all their obligations under their
Letters of Undertaking.
Pursuant to the Management and Underwriting Agreement, the Company has agreed, amongst other matters, that it will not, subject to certain exceptions, issue any new Shares (other than Rights Shares) at any time from the date of this Announcement up to 90 days following the completion of the Rights Issue, without the prior written consent of the Manager and the Underwriter, such consent not to be unreasonably withheld.
3 APPROVALS
The Rights Issue is subject to, inter alia, the following:-
(i) the approval in-principle having been granted by the SGX-ST (and such approval not having been withdrawn or revoked on or prior to the closing date of the Rights Issue) for the listing and quotation of the Rights Shares on the Official List of the SGX-ST and, if such approval is granted subject to conditions, such conditions being acceptable to the Company; and
(ii) the lodgement of the OIS with MAS in accordance with Section 277 of the
Securities and Futures Act, Chapter 289 of Singapore.
An application will be made by the Company to the SGX-ST for the approval for listing of and quotation of the Rights Shares on the Official List of the SGX-ST and an appropriate announcement on the outcome of the application will be made in due course.
The OIS will be lodged with the MAS and despatched to Entitled Shareholders in due course after approval in-principle of the SGX-ST has been obtained.
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Duane Morris & Selvam LLP 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 Duane Morris & Selvam LLP.
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.
The Directors (including any Director who may have delegated detailed supervision of the preparation of this Announcement) collectively and individually accept full responsibility for the accuracy of the information given in this Announcement and confirm after making reasonable enquiries that, to the best of their knowledge and belief, this Announcement constitutes full and true disclosure of all material facts about the Rights issue, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Announcement misleading.
.
BY ORDER OF THE BOARD Loh Chee Meng
Company Secretary
28 December 2012
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