REPL::Placements::Placement of new ordinary shares

SINCAP GROUP LIMITED

(Incorporated in the Republic of Singapore)

(Company Registration No.: 201005161G)

PROPOSED PLACEMENT OF 1,738,000,000 NEW ORDINARY SHARES IN THE CAPITAL OF SINCAP GROUP LIMITED AT S$0.0026 FOR EACH PLACEMENT SHARE TO RAISE GROSS PROCEEDS OF S$4,518,800

1. BACKGROUND
   The Board of Directors (the "Board" or the "Directors") of Sincap Group Limited (the "Company" together with its subsidiaries, the "Group") wishes to announce that the Company has today entered into a subscription agreement for the issue and allotment of new ordinary shares in the capital of the Company (the "Subscription Agreement") with Hong Kong Puzhou New Material Co., Limited (the "Subscriber").
   Pursuant to the terms of the Subscription Agreement, the Company proposes to raise capital by issuing an aggregate of 1,738,000,000 new ordinary shares in the share capital of the Company (the "Placement Shares") to the Subscribers (the "Proposed Placement"). The total consideration for the Proposed Placement is S$4,518,800 (the "Total Consideration"). The total number of Placement Shares represent approximately 50.54% of the share capital of the Company on an enlarged basis (excluding treasury shares), following the Proposed Placement. Accordingly, there will be a change in control of the Company pursuant to the completion of the Proposed Placement (as the Subscriber will acquire a shareholding of 50.54%), and specific shareholder approval will be sought pursuant to an extraordinary general meeting ("EGM") to be convened by the Company subsequently.
   To facilitate the Proposed Placement, the Company will convene an extraordinary general meeting to seek shareholder approval for the following resolutions:
2. 1. a whitewash resolution for the shareholders to waive their rights to receive a general offer from the Subscriber under Rule 14 of the Singapore Code on Take-Overs and Mergers (the "Take-OverCode");
   2. pursuant to Rule 803 of the Catalist Rules, the change in controlling interest of the Company upon the completion of the Proposed Placement, which will result in the Subscriber's acquisition of 50.54% shareholding in the Company,
   3. the issue of the Placement Shares, in accordance with Rule 811(3) of the Rules of Catalist of the Listing Manual of the SGX-ST ("Catalist Rules");
   4. the allotment and issuance of the Placement Shares at the Issue Price (as defined below); and
   5. the Company's plans for the diversification of business.
3. RATIONALE OF PROPOSED PLACEMENT

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Since the onset of the COVID-19 pandemic in February of 2020, the Company's coal- trading business has faced significant headwinds which is expected to continue into the near future. While there are currently no restrictions in the China market on the purchase of coal from overseas territories, the business is currently affected by supply chain issues owing mainly to high freight costs. The COVID-19 pandemic and various lockdown measures imposed by governments around the globe had precipitated a surge in freight costs due to disrupted shipping and port-handling capacity. While the Company has orders on hand and receivables on the horizon, it is not commercially viable for the Company to fulfil such orders in the short-term as the high freight costs for shipment will result in losses to the Company. Notwithstanding the current situation, the Company is in the process of sourcing for other potential freights in the coal trade to execute these orders. Further, the Board is in discussions with the Subscriber to diversify the Company's business to establish more profitable revenue streams. Accordingly, while the Company is currently facing cost issues, the Board's view is that the Company's business is and will remain viable.

In light of the aforementioned situation, the Proposed Placement presents a valuable opportunity for the Company to address its current cashflow issues by bringing in a strategic shareholder with fresh visions and ideas and to initiate a collaborative partnership for the purposes of pivoting the Company's business towards more profitable endeavours.

In this regard, the Subscriber has committed himself to assisting the Company to pivot both in terms of business and investment opportunities and potential fund-raising activities. The onboarding of the Subscriber and its two (2) nominated directors will bring fresh visions to the Company's Board, and the Company will eventually take a new direction in its businesses. One of the businesses being contemplated is in the industry of construction materials. The details of the businesses in contemplation are not yet available as the Subscriber and the Board are still in discussion on the same. As such, the Company will make a separate announcement elaborating in detail what these plans are when they are finalized.

3. TERMS OF THE PROPOSED PLACEMENT PURSUANT TO THE SUBSCRIPTION AGREEMENT

3.1 Issue Price

The Placement Shares shall be allotted and issued at an issue price of S$0.0026 per Placement Share (the "Issue Price"). The Issue Price was arrived at following arm's length negotiations between the Company and the Subscriber and represents a discount of approximately 48% to the volume weighted average price of S$0.005 for trades done on the shares of the Company (the "Shares") on Catalist of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 28 April 2021 (being the last full market day on which shares of the Company were traded preceding the day on which the Subscription Agreement was signed).

As the Issue Price represents a discount exceeding 10% to the volume weighted average price for trades done on the shares of the Company on SGX-ST on the last full market day on which shares of the Company were traded preceding the day on which the Subscription Agreement was signed, the Company will be seeking specific shareholder approval for the issues of the Placement Shares, in accordance with Rule 811(3) of the Rules of Catalist of the Listing Manual of the SGX-ST. The Company will subsequently convene an extraordinary general meeting to seek specific shareholder approval for the allotment and issuance of the Placement Shares.

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1. The Placement Shares
   The Placement Shares, when issued and delivered to the Subscriber, shall rank pari passu with and shall carry all rights similar to the existing Shares except that they will not rank for any dividend, right, allotment or other distributions, the record date for which falls on or before the completion of the Proposed Placement.
   Pursuant to the allotment and issue of the Placement Shares, the Company's issued and paid-up share capital (excluding treasury shares) will increase from 1,701,000,410 Shares, as at the date of this announcement, to 3,439,000,410 Shares (the "Enlarged Share Capital").
2. Conditions Precedent under the Subscription Agreement
   Under the terms of the Subscription Agreement, the Company has requested the Subscriber and the Subscriber has agreed to subscribe for the Placement Shares on the terms and subject to the conditions set out in the Subscription Agreement.
   The Proposed Placement is subject to, amongst others, the following conditions precedent:
3. 1. the Subscriber obtaining a waiver from the Securities Industry Council from any requirements under the Take-Over Code to make a mandatory general offer to the shareholders of the Company in connection with the allotment and issuance of the Placement Shares;
   2. the Company obtaining shareholders' approval, at an extraordinary general meeting to be held by the Company, of a Whitewash Resolution to waive their rights to receive a general offer from the Subscriber under Rule 14 of the Take- Over Code;
   3. the Company obtaining shareholders' approval, at an extraordinary general meeting to be held by the Company, for the allotment and issuance of the Placement Shares to the Subscriber in accordance with Section 161 of the Companies Act (Cap. 50);
   4. the appointment of 2 new executive directors as nominated by the Subscriber to the Company's board of directors;
   5. the trading suspension of the Company's shares on the Catalist board of the SGX-ST being lifted;
   6. the receipt of the listing and quotation notice of the Placement Shares on the Catalist of the SGX-ST (the "LQN") being obtained from the SGX-ST via the Sponsor and not having been revoked or amended as at the date of completion (the "Completion Date") and, where such approval is subject to conditions, such conditions being reasonably acceptable to the Company and to the Subscriber;
   7. a deposit of S$450,000 is made by the Subscriber within 90 days of the date of the Placement Agreement, to be held on trust by the Company for the Subscriber to fulfil its obligations under the terms of the Placement Agreement and in the event that the Subscriber should breach or fail to fulfil its obligations under the Placement Agreement, such deposit will be retained by the Company as fees paid to the Company;

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1. the transactions contemplated in the Subscription Agreement (including but not limited to the issue and subscription of the Placement Shares) not being prohibited or restricted by any statute, order, rule, regulation, ruling, direction, directive, guideline or request, whether or not having the force of law, and whether promulgated or made by any legislative, executive or regulatory body or authority of Singapore (including the SGX-ST and the Monetary Authority of Singapore) or of any other jurisdiction which is applicable to the Company or the Subscriber;
2. there having been no occurrence of any event or discovery of any fact rendering any of the warranties in Clause 7 or Clause 8 of the Subscription Agreement untrue or incorrect in any material respect as at the Completion Date as if such warranties had been given again on the Completion Date; and
3. the Company and the Subscribers not being in breach of any of the undertakings in the Subscription Agreement as at the Completion Date.

If the conditions set forth in the Subscription Agreement are not satisfied on the date falling eight (8) months from the date of the Subscription Agreement ("Long Stop Date") (or such other date as may be mutually agreed between the Company and the Subscriber), the obligations of the Subscriber to subscribe for the Placement Shares shall terminate and in that event the Company and the Subscriber shall be released and discharged from their respective obligations under the Subscription Agreement and neither the Company nor the Subscriber shall have any claim against each other or any costs, expenses, damages, losses, compensation or otherwise in respect of the Subscription Agreement, save for any antecedent breach of the Subscription Agreement.

An announcement of the receipt of the LQN in relation to the Placement Shares will be made in due course when the LQN is obtained.

3.4 Completion

Completion is scheduled to take place on the date falling no later than twenty-one (21) market days immediately following the satisfaction of the conditions precedents as set out in paragraph 3.3 above (or such other date after the satisfaction of the conditions precedents as the Company and the Subscriber may agree).

4. ADDITIONAL LISTING APPLICATION

The Company will be making an application to the SGX-ST via the Company's sponsor, Stamford Corporate Services Pte. Ltd. (the "Sponsor"), for the admission of the Placement Shares to the Catalist of the SGX-ST and for the listing and quotation of the Placement Shares on the Catalist of the SGX-ST after it has rectified its existing non-compliance of the Catalist Rules, including to convene an annual general meeting for the financial year ending 31 December 2020 as required under Catalist Rule 701(1) and (2) and to meet the minimum number of three (3) members in its audit committee as required under Catalist Rule 704(7). The Company will make the necessary announcements once the receipt for the listing and quotation of the Placement Shares has been obtained from the SGX-ST.

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1. THE SUBSCRIBER
   The Subscriber is a company incorporated in Hong Kong, with its registered address at Room 4, 16/F, Ho King Commercial Centre, 2-16 Fayuen Street, Mongkok, Kowloon, Hong Kong. The ultimate beneficial owner of the Subscriber is a one Huang Hairong, the director and sole shareholder of the Subscriber. He was born in Jiangsu, China in 1970 and is presently 51 years of age. From 2014 to 2021, Huang Hairong was a deputy general manager of a real estate company in Jiangsu, China. In his role as deputy manager, he worked with the general manager to manage and supervise the affairs of the company. He was also principally involved in organizing the acquisition of supplies and materials necessary for the company's operations, including controlling all aspects of the supply chain. From 2009 to 2013, Huang Hairong was the resource manager of a construction company. In his role as resource manager, he was in charge of all supply chain-related matters including the acquisition of construction materials for the operation of the company.
   The Subscriber and the Executive Chairman and CEO, Mr Chu Ming Kin, were acquainted in a social setting. The Subscriber is making its investment in the Company based solely on its own assessment and evaluation of the Company (including its financials and prospects). No introductory fees of any kind were paid by the Company and/or its Directors for the Proposed Placement.
   The Subscriber does not have any connection (including business relationships) with, the Company, its Directors and substantial shareholders, and is not a person to whom the Company is prohibited from issuing shares to, as provided for by Rule 812 of the Rules of Catalist of the Listing Manual of the SGX-ST.
   The Subscriber and its beneficial owners have had no previous business, commercial, trade dealings or any other connection with the Group, the Directors and controlling shareholders of the Company.
2. FINANCIAL EFFECTS OF THE PROPOSED PLACEMENT
   The financial effects of the Proposed Placement set out below are for illustrative purposes only and are based on the unaudited financial statements of the Company for the financial year ended 31 December 2020 ("FY2020") on the assumptions that:
3. 1. the Proposed Placement of 1,738,000,000 Placement Shares is fully subscribed for by the Subscriber on the basis of an aggregate placement consideration of S$4,518,800;
   2. the expenses incurred in the Proposed Placement are approximately S$300,000;
   3. the financial effect on the consolidated net tangible assets ("NTA") per Share is computed based on the assumption that the Proposed Placement was completed on 31 December 2020; and
   4. the financial effect on the earnings per Share ("EPS") is computed based on the assumption that the Proposed Placement was completed on 31 December 2020.

The Company will set out the financial effects of the Proposed Placement based on the audited financial statements of the Company for FY2020 in the circular to be dispatched to Shareholders for the Proposed Placement ("Circular") in due course.

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