WesTech Electronics Limited : Change In Capital :: Rights Issue :: Proposed Renounceable Non-Underwritten Rights Cum Warrants Issue

WE HOLDINGS LTD. (Company Registration No. 198600445D) (Incorporated in the Republic of Singapore) ("Company")

PROPOSED RENOUNCEABLE NON-UNDERWRITTEN RIGHTS CUM WARRANTS ISSUE

1. INTRODUCTION
1.1 The Board of Directors ("Board" or "Directors") of WE Holdings Ltd. (the "Company" and together with its subsidiaries, the "Group") is pleased to announce that the Company is proposing a renounceable non-underwritten rights cum warrants issue of up to 1,313,813,266 new ordinary shares in the capital of the Company ("Rights Shares") at an issue price of S$0.015 for each Rights Share ("Issue Price"), with up to 1,313,813,266 free detachable warrants ("Warrants"), each Warrant carrying the right to subscribe for one (1) new ordinary share in the capital of the Company ("Warrant Share") at an exercise price of S$0.030 for each Warrant Share ("Exercise Price") on the basis of one (1) Rights Share with one (1) Warrant for every two (2) existing ordinary shares in the capital of the Company ("Share"), held by the shareholders of the Company ("Shareholders") as at a date and time to be determined by the Directors for the purpose of determining the entitlements of the Entitled Shareholders (as defined below) ("Books Closure Date"), fractional entitlements to be disregarded ("Rights cum Warrants Issue").
1.2 The Company will be seeking specific approval from the Shareholders at an extraordinary general meeting of the Company ("EGM") to be convened to approve the Rights cum Warrants Issue. A circular setting out, amongst other things, the details of, and other relevant information pertaining to the Rights cum Warrants Issue ("Circular"), together with the notice of the EGM, will be despatched to the Shareholders in due course.
2. PRINCIPAL TERMS OF RIGHTS CUM WARRANTS ISSUE
2.1 Basis of Provisional Allotment. The Rights cum Warrants Issue is proposed to be made on a renounceable basis to Entitled Shareholders (as defined below) on the basis of one (1) Rights Share with one (1) free detachable Warrant for every two (2) existing Shares, as at the Books Closure Date, fractional entitlements to be disregarded.
2.2 Issue and Exercise Price. Assuming that the FY2013 Warrants (as defined below) has been exercised in full and the issue of the Europtronic Shares (as defined below) has been completed in full prior to the Books Closure Date, the proposed Issue Price of S$0.015 for each Rights Share represents a discount of approximately 65% to the closing market price of the Shares on Catalist Board ("Catalist") of the Singapore Exchange Securities Trading Limited ("SGX-ST") as at the date of this announcement, and a discount of approximately 52% to the theoretical ex-rights price of the Share. The proposed Exercise Price of S$0.030 for each Warrant Share represents a discount of approximately 30% to the closing market price
of the Shares on Catalist as at the date of this announcement, and a discount of approximately 4% to the theoretical ex-rights price of the Share.
2.3 Form and Subscription Rights of the Warrants. Up to 1,313,813,266 Warrants will be issued in registered form and will be subject to the terms and conditions to be set out in an instrument by way of a deed poll constituting the Warrants ("Deed Poll"). The Warrant will carry the right to subscribe for one (1) Warrant Share at the Exercise Price of S$0.030 for each Warrant Share at any time during the period commencing on and including the date of the issue of the Warrants and expiring at 5:00 pm on the date immediately preceding the second (2nd) anniversary of the date of the issue of the Warrants ("Exercise Period"), unless such date is a date on which the register of members of the Company ("Register of Members") is closed or is not a day on which Catalist is open for securities trading ("Market Day"), in which case the Exercise Period shall end on the date prior to the closure of the Register of Members of the Company or the immediate preceding Market Day, as the case
may be, but excluding such period(s) during which the register of holders of Warrants may be closed pursuant to the terms and conditions of the Warrants as set out in the Deed Poll. The Warrants which have not been exercised after the date of expiry shall lapse and cease to be valid for any purpose.
2.4 Detachability and Trading of the Warrants. The Warrants are immediately detachable from the Rights Shares upon issue, and will be issued in registered form and will be listed and traded separately on Catalist under the book-entry (scripless) settlement system, upon the listing and quotation of the Warrants on Catalist, subject to, amongst others, there being an adequate spread of holdings of the Warrants to provide for an orderly market in the Warrants.
2.5 Eligibility of Shareholders to participate in the Rights cum Warrants Issue. The Company proposes to provisionally allot Rights Shares with Warrants to all the "Entitled Shareholders", comprising Entitled Depositors and Entitled Scripholders (both as defined herein).
2.6 Entitled Depositors. Shareholders whose Shares are registered in the name of the Central Depository (Pte) Limited ("CDP") and whose securities accounts with CDP are credited with Shares as at the Books Closure Date ("Depositors") will be provisionally allotted their entitlements on the basis of the number of Shares standing to the credit of their securities account with CDP as at the Books Closure Date. To be "Entitled Depositors", Depositors must have registered addresses with CDP in Singapore as at the Books Closure Date or must have, at least five (5) Market Days prior to the Books Closure Date, provided CDP with addresses in Singapore for the service of notices and documents.
2.7 Entitled Scripholders. Duly completed and stamped transfers (in respect of Shares not registered in the name of CDP) together with all relevant documents of title received up to the Books Closure Date by Tricor Barbinder Share Registration Services ("Share Registrar"), will be registered to determine the provisional entitlements of the transferee ("Scripholder"), which term shall include a person who is registered as a holder of Shares and whose share certificates are not deposited with CDP) under the Rights cum Warrants Issue. To be "Entitled Scripholders", Scripholders must have registered addresses in Singapore as at the Books Closure Date or must have, at least five (5) Market Days prior to the Books Closure Date, provided the Share Registrar with addresses in Singapore for the service of notices and documents.
2.8 CPF Investment Scheme. Persons who bought their Shares previously using their Central Provident Fund account savings ("CPF Funds") may use the same for the payment of the Issue Price to accept their provisional allotments of Rights Shares with Warrants and (if applicable) apply for excess Rights Shares with Warrants, subject to the applicable rules and regulations of the Central Provident Fund. Such persons who wish to accept their provisional allotments of Rights Shares with Warrants will need to instruct their respective approved banks where they hold their CPF Investment Accounts, to accept their provisional allotment of Rights Shares with Warrants and (if applicable) apply for the excess Rights Shares with Warrants on their behalf in accordance with the Offer Information Statement. CPF Funds may not, however, be used for the purchase of the provisional allotments of the Rights Shares with Warrants directly from the market.
2.9 Foreign Shareholders. For practical reasons and in order to avoid violation of relevant securities legislation applicable in countries other than Singapore, the Rights cum Warrants Issue is only made in Singapore and the Rights Share and Warrants will not be offered to Shareholders with registered addresses outside Singapore as at the Books Closure Date and who have not at least five (5) market days prior to the Books Closure Date, provided to the Company, the CDP or the Share Registrar, as the case may be, addresses in Singapore for the service of notices and documents ("Foreign Shareholders"). The Offer Information Statement (to be set out in detail below) to be issued for the Rights cum Warrants Issue and its accompanying documents will not be mailed outside Singapore. Accordingly, no provisional allotments of the Rights Shares or the Warrants will be made to Foreign Shareholders and no purported acceptance thereof or application will be valid. Entitlements to Rights Shares or the Warrants which would otherwise accrue to Foreign Shareholders will, if
practicable, be sold "nil-paid" on Catalist after dealings in the provisional allotments of Rights
Shares and the Warrants 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 expenses to be incurred in relation thereto. The net proceeds from all such sales, after deduction of all expenses therefrom, will be pooled and thereafter distributed to Foreign Shareholders in proportion to their respective shareholdings as at the Books Closure Date and sent to them at their own risk by ordinary post, where the amount of net proceeds to be distributed to any single Foreign Shareholder is not less than S$10.00. In the event the amount 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 in the interests of the Company and no Foreign Shareholder shall have any claim whatsoever against the Company or CDP and their respective officers in connection therewith. Where such provisional allotments of Rights Shares and the Warrants are sold "nil-paid" on Catalist, 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, CDP and their respective officers in respect of such sales or the proceeds thereof, the provisional allotments of Rights Shares and the Warrants represented by such provisional allotments.
2.10 Status and Ranking. The Rights Shares will be payable in full upon acceptance and/or application and, upon allotment and issue, will rank pari passu in all respects with the Shares then in issue, save for any dividends, rights, allotments or other distributions, the Record Date (as defined herein) for which falls before the date of issue of the Rights Shares. The Warrant Shares allotted and issued upon the exercise of the Warrants shall be fully paid and shall rank for any dividends, rights, allotments or other distributions, the Record Date (as defined herein) for which is on or after the relevant date of exercise of the Warrants and shall rank pari passu in all respect with the then existing issued Shares. For the purpose herein, "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 the Shareholders must be registered with the Company or CDP, as the case may be, in order to participate in such dividends, rights, allotments or other distributions.
2.11 Provisional Allotments and Excess Applications. Entitled Shareholders will be at liberty to accept, decline, renounce or trade their provisional allotments of the Rights Shares and the Warrants and will be eligible to apply for Rights Shares and the Warrants in excess of their provisional allotments under the Rights cum Warrants Issue. Provisional allotments of Rights Shares and Warrants which are not taken up for any reason shall be used to satisfy excess applications for Rights Shares and Warrants (if any) or otherwise dealt with in such manner as the Board may in its absolute discretion deem fit in the interests of the Company. In the allotment of excess Rights Shares with Warrants, preference will be given to Entitled Shareholders in satisfaction of their application for excess Rights Shares and Warrants, if any, provided that where there are insufficient excess Rights Shares with Warrants to allot to each application, the Company shall allot the excess Rights Shares with Warrants to Entitled Shareholders such that preference will be given to the rounding of odd lots, and Directors and substantial Shareholders who have control or influence over the Company in connection with the day-to-day affairs of the Company or the terms of the Rights cum Warrants Issue, or have representation (direct or through a nominee) on the board of the Company will either be ineligible for excess Rights Shares, or if eligible, rank last in priority for the rounding of odd lots and allotment of excess Rights Shares and Warrants. The Company will also not make any allotment and issue of any excess Rights Shares and Warrants that will result in a transfer of controlling interest in the Company unless otherwise approved by Shareholders in a general meeting.
Fractional entitlements to the Rights Shares and Warrants will be disregarded in arriving at the Entitled 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 otherwise dealt with in such manner as the Directors may in their absolute discretion, deem fit for the benefit of the Company. The Exercise Price and/or the number of Warrants to be held by each Warrantholder will, after their issue, be subject to adjustments under certain
circumstances to be set out in the Deed Poll. Such circumstances include, without limitation, consolidation or subdivision of Shares, capitalisation issues, rights issue and certain capital distributions. Any such adjustments shall (unless otherwise provided under the SGX-ST Listing Manual Section B: Rules of Catalist ("Catalist Rules") from time to time) be announced by the Company.
2.12 Option to scale down subscription. Depending on the level of subscription for the Rights Shares, the Company will, if necessary, scale down the subscription and/or excess applications for the Rights Shares by any of the Shareholders (if such Shareholder chooses to subscribe for its pro-rata Rights Shares entitlement and/or apply for excess Rights Shares) to avoid placing the relevant Shareholder and parties acting in concert with him (as defined in the Singapore Code of Takeovers and Mergers (the "Code") in the position of incurring a mandatory general offer obligation under the Code, as a result of other Shareholders not taking up their Rights Shares entitlements fully.
3. SIZE OF RIGHTS CUM WARRANTS ISSUE
3.1 As at the date of this announcement, the existing issued and paid-up share capital of the
Company is 1,749,112,811 Shares ("Existing Share Capital"), and the Company has:
(a) issued 748,361,049 outstanding free detachable warrants issued pursuant to the rights cum warrants issue announced by the Company on 2 April 2013, exercisable into 748,361,049 Shares ("FY2013 Warrants"); and
(b) 130,152,672 Shares to be issued as consideration for the acquisition of Europtronic (Singapore) Pte Ltd as announced by the Company on 12 September 2013 ("Europtronic Shares").
For illustration purposes only:
(i) based on the Existing Share Capital and assuming that (a) before the Books Closure Date, the FY2013 Warrants has been exercised in full and the issue of the Europtronic Shares has been completed in full; and (b) the Rights cum Warrant Issue is fully subscribed, an aggregate 1,313,813,266 Rights Shares with 1,313,813,266
Warrants will be issued pursuant to the Rights cum Warrants Issue.
(ii) based on the Existing Share Capital and assuming (a) before the Books Closure Date, none of the FY2013 Warrants has been exercised and the issue of the Europtronic Shares has not been completed, and (b) the Rights cum Warrant Issue is fully subscribed, an aggregate 874,556,405 Rights Shares with 874,556,405 Warrants will be issued pursuant to the Rights cum Warrants Issue.
4. RATIONALE AND USE OF PROCEEDS
4.1 Rationale. On 18 May 2013, the Company announced its entry into the term sheet for the proposed acquisition of 20% shareholding in Dragon Cement Co., Ltd. ("Dragon Cement Acquisition") for an aggregate consideration of US$20 million.
On 12 September 2013, for the purpose of funding the Dragon Cement Acquisition, the Company entered into share placement agreements with certain investors for the issue and allotment of an aggregate 204,050,000 new Shares ("Placement Shares") at an issue price of S$0.04302 per new Shares for an aggregate amount of S$8,778,231, together with a grant of options to such investors to subscribe for an aggregate 204,050,000 additional Shares ("Option Shares") at the issue price of S$0.047322 per Option Share ("Option Price"), for an aggregate amount of S$9,656,054.10 ("Options"). It was anticipated that on the issue of the Placement Shares and the full exercise of the Option, the Company will raise approximately S$17.66 million net proceeds to fund the Dragon Cement Acquisition.
The Placement was completed on 2 October 2013, while the Options were not exercised by any of the investors and expired on 8 December 2013.
The Company is now proposing to carry out the Rights cum Warrants Issue towards (i) partially funding the Dragon Cement Acquisition; (ii) funding the expansion of the Group's coal business; and (iii) funding the Group's general working capital requirements.
4.2 Use of Proceeds. In the event that (i) before the Books Closure Date, the FY2013 Warrants has been exercised in full and the issue of the Europtronic Shares has been completed in full, and (ii) the Rights cum Warrants Issue is subscribed in full, the estimated net proceeds ("Net Proceeds") will be approximately S$19.3 million, after deducting professionals' fees and related expenses incurred in connection with the Rights cum Warrants Issue. On the basis of the foregoing, and assuming that all Warrants issued are exercised, the estimated gross proceeds from the exercise of the Warrants ("Exercise Proceeds") will be approximately S$39.4million.
In the event that (i) before the Books Closure Date, none of the FY2013 Warrants has been exercised and the issue of the Europtronic Shares has not been completed, and (ii) the Rights cum Warrants Issue is subscribed in full, the estimated Net Proceeds will be approximately S$12.7 million. On the basis of the foregoing, and assuming that all Warrants issued are exercised, the Exercise Proceeds will be approximately S$26.2 million
The Company intends to use the Net Proceeds in the following proportions: (a) up to S$15 million to partially fund the Dragon Cement Acquisition;
(b) up to S$10 million to fund the expansion of the Group's coal business; and
(c) the balance, if any, towards the Group's working capital requirements.
As and when the Warrants are exercised, the Exercise Proceeds raised may, at the discretion of the Directors, be applied towards potential acquisitions and/or working capital requirements of the Group. Pending the deployment of Net Proceeds and/or Exercise Proceeds, such proceeds may be deposited with banks and/or financial institutions, invested in short-term money market instruments and/or marketable securities, or used for any other purpose on a short-term basis, as the Directors may in their absolute discretion deem fit.
The Company will make periodic announcements on the utilisation of Net Proceeds and/or Exercise Proceeds as and when such proceeds are materially disbursed, and provide a status report on the use of the proceeds raised in the Company's interim and full-year financial statements issued under Rule 705 of the Catalist Rules and the Company's annual report. Where the proceeds have been used for working capital, the Company will provide a breakdown with specific details on how the proceeds have been applied in the announcements and status reports. Where there is a material deviation in the use of proceeds, the Company will also state the reasons for such deviation.
The Company has decided to proceed with the Rights cum Warrant Issue on a non- underwritten basis as the Company believes that the Issue Price of S$0.015 for each Rights Share and S$0.03 for each Warrant is sufficiently attractive. Further, the Directors are of the opinion that there is no minimum amount which must be raised from the Rights cum Warrant Issue, as in the event it is unable to raise sufficient funds for the Dragon Cement Acquisition, the Company will source for alternative sources of funding, including but not limited to bank borrowings. Hence, in view of the above and the savings enjoyed for not having to bear underwriting fees, the Company has decided to proceed with the Rights cum Warrant Issue on a non-underwritten basis.
5. OFFER INFORMATION STATEMENT
The terms and conditions of the Rights cum Warrants Issue are subject to such changes as the Directors may deem fit. The final terms and conditions of the Rights cum Warrants Issue will be contained in the Offer Information Statement to be issued by the Company in due course following the EGM, if the Rights cum Warrants Issue is approved at the EGM. All
Entitled Shareholders will receive the appropriate application forms and accompanying documents at their Singapore addresses.
6. CIRCULAR AND EGM
The Company intends to convene the EGM to seek Shareholders' approval for the Rights cum Warrants Issue. The Circular containing, inter alia, the notice of the EGM and details of the abovementioned transactions will be despatched to the Shareholders in due course.
7. APPROVALS
The Rights cum Warrants Issue is subject to, inter alia, (i) approval from the Shareholders at the EGM to approve the Rights cum Warrants Issue, (ii) the receipt of the listing and quotation notice from the SGX-ST for the listing and quotation of the Rights Shares, the Warrants and the Warrant Shares on Catalist, and (iii) lodgment of the Offer Information Statement with the SGX-ST (acting as agent of the Monetary Authority of Singapore). RHT Capital Pte Ltd, acting as Sponsor to, and on behalf of, the Company, will submit an additional listing confirmation to the SGX-ST for permission for the listing and quotation of the Rights Shares, the Warrants and the Warrant Shares on Catalist. An appropriate announcement will be made in due course to notify Shareholders when the listing and quotation notice is obtained.
8. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS
Save as disclosed in this Announcement, none of the Directors and substantial Shareholders of the Company has any interests, direct or indirect, in the Rights cum Warrants Issue, (other than in his capacity as Director or Shareholder of the Company).
9. CONFIRMATION BY DIRECTORS
The Directors are of the opinion that after taking into consideration:
(a) the present bank facilities, the working capital available to the Group is sufficient to meet its present requirements; and
(b) the present bank facilities and the proceeds from the Rights cum Warrants Issue, the working capital available to the Group is sufficient to meet its present requirements.
The Directors confirm that the proceeds from the Rights cum Warrants Issue will be utilised in accordance with Paragraph 4.2 above. The Company is proposing to undertake the Rights cum Warrants Issue as a strategic initiative to raise additional funding to strengthen the financial position of the Group by enlarging the Group's working capital and capital base and enhance the financial flexibility of the Company to capitalise on potential growth and acquisition opportunities.
10. RESPONSIBILITY STATEMENT
The Directors collectively and individually accept full responsibility for the accuracy of the information given in this announcement and confirm after making all 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 cum Warrants 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. Where information in the announcement has been extracted from published or otherwise publicly available sources or obtained from a named source, the sole responsibility of the Directors has been to ensure that such information has been accurately and correctly extracted from those sources and/or reproduced in this Announcement in its proper form and context.
11. FURTHER ANNOUNCEMENTS
Further announcements will be made by the Company in relation to the Rights cum Warrants
Issue as and when appropriate.
BY ORDER OF THE BOARD
Terence Tea Yeok Kian
Executive Chairman
13 January 2014

This Announcement has been reviewed by the Company's Sponsor, RHT Capital Pte. Ltd., for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited (SGX-ST). The Company's Sponsor has not independently verified the contents of the Announcements.

This Announcement has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this Announcement including the correctness of any of the statements or opinions made or reports contained in this Announcement.

The contact person for the Sponsor is:-

Name: Ms Amanda Chen, Registered Professional, RHT Capital Pte. Ltd. Address: Six Battery Road #10-01, Singapore 049909

Tel: [phone]