Change - Change in Corporate Information::Increase in investment in Pegasus Advance Engineering Sdn Bhd

MUN SIONG ENGINEERING LIMITED

(Company Registration No. 196900250M)

(Incorporated in the Republic of Singapore)

INCREASE IN INVESTMENT IN PEGASUS ADVANCE ENGINEERING SDN BHD

The board of directors ("Directors" or "Board") of Mun Siong Engineering Limited (the "Company", together with its subsidiaries, the "Group") refers to the following:

1. the Company's announcement dated 17 January 2020 relating to the setting up of a joint venture company, Pegasus Advance Engineering Sdn Bhd ("PAE"). PAE was incorporated on 24 December 2019 in Malaysia with an initial share capital of RM1.00;
2. the Company's announcement dated 13 August 2020 informing the shareholders of the Company (the "Shareholders") that pursuant to a shareholders' agreement dated 16 January 2020 relating to PAE, the issued and paid up capital of PAE was increased to RM750,000 comprising 750,000 ordinary shares, of which (i) 382,000 shares (51% of the share capital of PAE) were held by Mohamed Ridza Bin Mohamed Abdulla ("MRA"); and (ii) 367,500 (49% of the share capital of PAE) shares were held by the Company's wholly- owned subsidiary, Mun Siong Engineering Sdn. Bhd. ("MSE Malaysia"); and
3. the Company's announcement dated 5 March 2021 (the "Announcement") relating to the conditional sale and purchase agreement dated 5 March 2021 ("SPA") entered into between PAE (the "Purchaser") and Teras Eco Sdn Bhd (the "Vendor"), pursuant to which the Purchaser shall acquire a plot of 60 years leasehold industrial land and a building in the Mukim of Tanjung Surat, District of Kota Tinggi, State of Johor (the "Property") (the "Acquisition").

Unless otherwise defined, all capitalised terms not defined herein shall have the same meanings ascribed to them in the Announcement.

As set out in the Announcement, the total investment commitment relating to the Acquisition would be approximately RM16.0 million (the "Investment Commitment"), comprising the consideration for the Acquisition of RM6.4 million and construction costs of approximately RM9.6 million to construct a fabrication building on the Property.

Consequent to the above, the Board wishes to update the Shareholders that the Company and MSE Malaysia have on 8 July 2021 entered into a subscription agreement with PAE and MRA (the "Subscription Agreement"), governed by Malaysian law, pursuant to which the Company shall inject additional capital into PAE, by subscribing for up to 80 million redeemable convertible preference shares ("RCPS") in PAE, such subscription to take place in tranches depending on the working capital requirements of PAE and at the Company's discretion, at an issue price of RM0.50 per RCPS.

The aggregate subscription monies of up to RM40 million shall be utilised to fund the Investment Commitment and for general working capital purposes of PAE. Pursuant to the terms of the Subscription Agreement, the Company may nominate any of its subsidiaries, such as MSE Malaysia, to subscribe for the RCPS. As disclosed in the Company's announcement dated 17 January 2020, PAE will spearhead the Group's marketing efforts in Malaysia, which is part of the Group's continuous drive to broaden its customer base. It will be reaching out to key players in the process industry (oil and gas and petrochemical). Besides the process industry, it will also be seeking business opportunities in industries where the Group's core competencies will be called upon. These include specialised services, maintenance and mechanical services and EPC works. PAE will be supported by the Group in project management and execution.

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The RCPS, when issued, will rank pari passu among themselves regardless of tranche or time of issue, and will rank ahead of the ordinary shares of PAE in the event of liquidation, dissolution, winding up or other repayment of capital (other than redemption). RCPS will also rank ahead of ordinary shares for purposes of declaration and payment of dividend. However, the RCPS does not confer RCPS holders the right to participate in the distribution of surplus assets or profits of PAE and the RCPS rank behind all secured and unsecured obligations of PAE.

Besides the preference afforded, the RCPS holder may also require immediate redemption of the RCPS if there is any occurrence of non-compliance or event of default as further described in the Subscription Agreement. The redemption price for the RCPS shall be the issue price for the RCPS. Separately, PAE has the option to redeem in whole or in part any amount of the outstanding RCPS at the issue price of the RCPS.

The RCPS held may, at the option of the RCPS holder, be converted in whole or in part into one

1. ordinary share each in PAE. Each ordinary share so converted shall be issued at a theoretical issue / conversion price of RM1.00 or the net tangible asset per share, whichever is lower.

PAE currently has two shareholders, namely, MSE Malaysia (49.00%) and MRA (51.00%). In the event of any conversion of the RCPS, there will be changes in the shareholding structure of PAE. For illustration purposes only, assuming that the maximum number of RCPS is issued to the Company and all such RCPS are converted into new ordinary shares in PAE, the resultant shareholding structure will be as follows: (i) Company's shareholding of 80 million ordinary shares (approximately 99.07% of PAE's share capital); (ii) MSE Malaysia's shareholding of 367,500 ordinary shares (approximately 0.46% of PAE's share capital); and MRA's shareholding of 382,000 ordinary shares (approximately 0.47% of PAE's share capital).

The above proposed subscription by the Company in PAE shall be funded internally and is not expected to have any material impact on the consolidated earnings per share and net tangible assets per share of the Group for the current financial year ending 31 December 2021.

None of the Directors or substantial shareholders of the Company has any interest, direct or indirect, in the subscription other than their respective shareholdings in the Company.

BY ORDER OF THE BOARD

Cheng Woei Fen

Executive Chairlady

8 July 2021

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