Placements :: Proposed Subscription Of 380,589,000 New Ord Shares Of The Company At S$0.02 For Each New Share

PROPOSED SUBSCRIPTION OF 380,589,000 NEW ORDINARY SHARES IN THE CAPITAL OF THE COMPANY AT S$0.02 FOR EACH NEW SHARE

1. INTRODUCTION

2. The board of directors (the "Board" or "Directors") of Vallianz Holdings Limited (the "Company," and together with its subsidiaries, the "Group") wishes to announce that the Company, certain subsidiaries of the Company as named in Appendix 1 to this Announcement (each a "Vallianz Subsidiary" and collectively, the "Vallianz Subsidiaries") and certain trade creditors of the Vallianz Subsidiaries as named in Appendix 1 to this Announcement (each a "Trade Creditor" and collectively, the "Trade Creditors") have, on 21 February 2017, entered into letters of agreement (the "Letter Agreements") pursuant to which:

3. each Trade Creditor has agreed to subscribe for such number of new ordinary shares (the "Settlement Shares") in the capital of the Company at the Issue Price (as defined below) per Settlement Share as set out against their respective names in Appendix 1 to this Announcement, aggregating 380,589,000 Settlement Shares (the "Proposed Subscription");

4. such part of the outstanding amount owing by each Vallianz Subsidiary to each Trade Creditor as set out in Appendix 1 to this Announcement (each a "Trade Payable") shall be novated to and assumed by the Company; and

5. such part of each Trade Payable as novated shall be settled and set-off by way of application of the Trade Payable towards payment of the aggregate amount payable by each applicable Trade Creditor for the Settlement Shares (the "Aggregate Issue Price") under the Proposed Subscription (the "Proposed Settlement") with the balance of each Trade Payable being settled by the Group in cash,

   (collectively, the "Proposed Subscription and Settlement").

6. The subscription of the Settlement Shares by the Trade Creditors pursuant to the Proposed Subscription will be fully set-off against the aggregate Trade Payables of S$7,611,780 pursuant to the Proposed Settlement.

7. TERMS OF THE PROPOSED SUBSCRIPTION AND SETTLEMENT

8. The Proposed Subscription

   On the Effective Date (as defined below), the Trade Creditors shall subscribe for their respective Settlement Shares at the Issue Price per Settlement Share and the Company shall allot and issue the Settlement Shares to each Trade Creditor.

9. The Proposed Settlement

   On the Effective Date (as defined below):

10. all liability of the Vallianz Subsidiaries in respect of all Trade Payables shall be novated to and assumed by the Company;

11. the Trade Payables shall be applied towards payment of the Aggregate Issue Price by way of a set-off to the extent of the amount of the Aggregate Issue Price, whereupon the Trade Payables shall be deemed to be paid by the Company to the Trade Creditors to the extent of the amount of the Aggregate Issue Price; and

12. the balance of the Trade Payables of each Trade Creditor after such set-off shall be paid by the Company to the Trade Creditors in cash ("Balance Cash Settlement").

13. Issue Price

    The Settlement Shares will be offered to and subscribed by the Subscriber at S$0.02 per Settlement Share (the "Issue Price"). The Issue Price is at discount of 1.0% to the volume weighted average price of S$0.0202 for trades done on the Catalist board of the Singapore Exchange Securities Trading Limited (the "SGX-ST") for the preceding market day, 20 February 2017, up to the time the Letter Agreements were signed.

14. Effective Date

    The Proposed Subscription and Settlement shall be effective from the date falling on the fifth (5th) business day after the Company receives the approval in-principle from the SGX-ST for the listing and quotation of the Settlement Shares on the Catalist board of the SGX-ST (the "Effective Date").

15. GENERAL MANDATE AND STATUS OF SETTLEMENT SHARES

16. The Settlement Shares will be allotted and issued pursuant to the general share issue mandate ("General Mandate") granted by the shareholders of the Company to the Directors at the last annual general meeting of the Company held on 7 April 2016 (the "2016 AGM"). As at the date of the 2016 AGM, the issued and paid-up share capital of the Company (excluding treasury shares) (the "Previous Share Capital") comprised 3,540,544,719 ordinary shares ("Shares"). According to the terms of the General Mandate, the aggregate number of Shares that may be issued other than on a pro-rata basis to existing shareholders of the Company shall not exceed such number of Shares representing 50% of the Previous Share Capital.

    As at the date of this Announcement, 350,000,000 Shares have previously been issued under the General Mandate following the completion of the subscription pursuant to the subscription agreement entered into on 16 January 2017 by the Company and Greatwill Asset Global Limited (the "Completed Subscription"), as announced in the Company's announcements dated 16 January, 26 January and 3 February 2017.

    Following the Completed Subscription and prior to the Proposed Subscription and Settlement, 1,420,272,360 Shares may still be issued under the General Mandate.

    The Settlement Shares to be allotted and issued to all of the Trade Creditors represent approximately 9.7% of the Company's issued share capital of 3,942,211,385 Shares as at the date of this Announcement, and approximately 8.8% of the enlarged share capital of 4,322,800,385 Shares after the allotment and issue of the Settlement Shares. The Company currently has no treasury shares.

17. The Settlement Shares, when allotted and issued, shall be free from all claims, charges, liens and other encumbrances whatsoever and shall rank pari passu in all respects with the Shares existing as at the date of an issue and allotment of the Settlement Shares, save that they will not rank for any dividends, rights, allotments other distributions, the record date in respect of which falls on or prior to such issue and allotment.

18. The Catalist sponsor of the Company, Provenance Capital Pte. Ltd., will be making an additional listing application for and on behalf of the Company to the SGX-ST for the listing and quotation of the Settlement Shares on the Catalist board of the SGX-ST. The Company will make the necessary announcement upon receipt of the approval in-principle from the SGX-ST for the listing and quotation of the Settlement Shares.

19. As a result of the Proposed Subscription and Settlement, the controlling shareholders of the Company, Swiber Holdings Limited and Rawabi Holding Company Limited, will have their respective shareholdings diluted from 22.9% to 20.9% and 17.0% to 15.5%.

20. The Settlement Shares will be eligible for the Rights cum Warrrants Issue as announced by the Company on 6 September 2016.

21. RATIONALE FOR THE PROPOSED SUBSCRIPTION AND SETTLEMENT AND USE OF PROCEEDS

22. The rationale of the Proposed Subscription and Settlement is to settle the Trade Payables whilst conserving cash reserves of the Group.

23. As set out under Paragraph 2.2(a) of this Announcement, the subscription of the Settlement Shares by Trade Creditors pursuant to the Proposed Subscription shall be fully set-off against the aggregate Trade Payables of S$7,611,780 pursuant to the Proposed Settlement, whereupon such aggregate Trade Payables shall be deemed to be paid by the Company to the Trade Creditors to the extent of the amount of S$7,611,780.

24. The Directors are of the opinion that, after taking into consideration the Group's present banking facilities, the Proposed Subscription and Settlement and the net proceeds of the Completed Subscription, the working capital available to the Group is sufficient to fund its present requirements.

25. FINANCIAL EFFECTS OF THE PROPOSED SUBSCRIPTION AND SETTLEMENT

26. Assuming that the Proposed Subscription and Settlement has been completed and all of the Settlement Shares have been issued, the existing issued number of Shares will increase by approximately 9.7% from 3,942,211,385 Shares (as at the date of this Announcement) to 4,322,800,385 Shares.

27. For illustrative purposes only and based on the unaudited consolidated financial statements of the Group for the fourth quarter ended 31 December 2016 ("4Q2016") as announced by the Company on 13 February 2017, the financial effects of the Proposed Subscription and Settlement on (i) the net asset value ("NAV") per Share of the Group (assuming that the Proposed Subscription and Settlement had been completed at the end of 4Q2016); and (ii) the earnings per Share ("EPS") of the Group (assuming that the Proposed Subscription and Settlement had been completed at the beginning of 4Q2016), are as follows:

    Before the Proposed Subscription and Settlement

    After the Proposed Subscription and Settlement

    NAV per Share (US cents) 6.95 6.42

    Number of Shares excluding treasury shares at the end of 4Q2016 for calculating NAV per Share ('000)

    3,592,211 3,972,800

    EPS (US cents) 0.41 0.37

    Weighted average number of Shares for calculating EPS

    3,529,010 3,909,599

    (Illustrative USD / S$ exchange rate on the date of this Announcement: 1 USD = S$1.4176)

28. The financial effects of the Proposed Subscription and Settlement on the Group are for illustrative purposes only and are, therefore, not indicative of the actual financial performance or position of the Group after the completion of the Proposed Subscription and Settlement.