UGL : 25/11/2016 - Confirmation of Release - UGL - UGL First Supplementary Target Statement

First Supplementary Target's Statement

UGL Limited

ACN 009 180 287

1. Introduction

   This document is a supplementary target's statement under section 644 of the Corporations Act 2001 (Cth). It is the first supplementary target's statement (First Supplementary Target's Statement) issued by UGL Limited ACN 009 180 287 (UGL) in relation to the off-market takeover bid for all the ordinary shares in UGL by CIMIC Group Investments No. 2 Pty Limited ACN 610 264 189 (a wholly owned subsidiary of CIMIC Group Limited ACN 004 482 982) (CIMIC). This First Supplementary Target's Statement supplements, and should be read together with, UGL's target's statement dated 7 November 2016 (Original Target's Statement).

2. Offer update

   Attached is a release containing an update in relation to CIMIC's takeover offer.

3. Notices

   Unless the context otherwise requires, terms defined in the Original Target's Statement have the same meaning as in this First Supplementary Target's Statement.

   This First Supplementary Target's Statement prevails to the extent of any inconsistency with the Original Target's Statement.

   A copy of this First Supplementary Target's Statement has been lodged with ASIC. Neither ASIC nor any of its officers take any responsibility for its contents. A copy of this First Supplementary Target's Statement has also been provided to ASX. Neither ASX nor any of its officers takes any responsibility for the contents of this document.

   Signed for and on behalf of UGL Limited following a resolution of the directors of UGL Limited.

   Kathryn Spargo

   Chairman

   25 November 2016

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   ASX Release

   25 November 2016

   CIMIC reaches 50.67% relevant interest in UGL

   UGL Directors unanimously recommend UGL shareholders accept CIMIC Offer

   Sydney: UGL Limited (UGL) notes the announcement made by CIMIC Group Investments No. 2 Pty Limited (a wholly owned subsidiary of CIMIC Group Limited) (CIMIC) that it has received acceptances under its off-market takeover bid (Offer) at $3.15 per UGL share (Offer Price) that, together with the UGL shares it has already acquired, represent a relevant interest in UGL of 50.67%. Having regard to the matters discussed below, the UGL Board now unanimously recommends that UGL shareholders ACCEPT the Offer, in the absence of a superior proposal.

   The UGL Board which recommended by a majority of 4:1 (Majority Directors) that UGL shareholders accept the Offer, in the absence of a superior proposal, no longer believe that the decision as to whether or not to accept the Offer is finely balanced.

   In addition to the reasons to accept outlined in the UGL Target's Statement dated 7 November 2016 (Original Target's Statement), including the Independent Expert's conclusion that the offer is fair and reasonable in the absence of a superior offer, the Majority Directors highlight the following potentially adverse consequences for UGL shareholders who do not accept the Offer due to CIMIC's majority voting power in UGL:

   • Under the terms of UGL's existing financing arrangements and recently refinanced bank facilities, a change of control of UGL triggers review events which could result in the need for UGL to renegotiate existing facilities or potentially explore alternative finance facilities. There is a risk that additional debt sources may not be available on commercially acceptable terms due to uncertainties created by the Offer which may lead UGL to consider an equity raising in certain circumstances. See sections 4.6, 5.9(g) and 9.2 of the Original Target's Statement for further details.

   • Change of control provisions may be triggered in a number of UGL's material contracts. If triggered, these provisions may lead to adverse consequences for UGL, including potential loss of revenue. See section 9.1 of the Original Target's Statement for further details.

   • The liquidity of UGL shares may fall, and, depending on the UGL share price and the level of CIMIC's holding, there is a risk UGL could be fully or partially removed from certain market indices due to limited free float and

/ or liquidity.

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• To the extent CIMIC effects changes in the UGL Board and management after reaching control, UGL may not be able to execute its current strategy, business plan or turnaround.

• UGL's business mix may change under the management of CIMIC as CIMIC has indicated in its Bidder's Statement that it intends to conduct a strategic review of UGL's businesses and may determine that some assets should be divested upon completion of its review.

• CIMIC's proposed review of UGL's dividend and capital management policies may also result in changes to the existing dividend policy and capital structure of UGL, including a potential equity raising.

For further detail in relation to consequences of CIMIC acquiring a majority shareholding in UGL, see section 5.4 of the Original Target's Statement.

Mr Robert Kaye SC, a Non-Executive Director, previously recommended that UGL shareholders reject the Offer. He was, and remains, of the view that the Offer Price may not reflect the full underlying value of UGL. However, after considering the implications of CIMIC now having voting power in UGL in excess of 50%, Mr Kaye SC now recommends that UGL shareholders accept the Offer, in the absence of a superior proposal for the following reasons:

1. As CIMIC now has voting power in UGL of in excess of 50%, CIMIC is in a position to cast the majority of votes at a general meeting of UGL shareholders. This means it can control the composition of UGL's Board of Directors and through them (but subject to the discharge of their Directors' duties) senior management, UGL's dividend policy and the strategic direction of the businesses of UGL and its subsidiaries. To the extent that CIMIC effects changes in the UGL Board and management, UGL may not be able to execute its current strategy, business plan or turnaround.

2. As CIMIC now has a relevant interest in excess of 50% of UGL's issued shares, liquidity of UGL shares will be lower than at present, and depending on the level of shares acquired by CIMIC, there is a risk that UGL could be fully or partially removed from certain S&P/ASX market indices due to lack of free float and/or liquidity.

The UGL Directors also note that no superior proposal has been presented to UGL and, with CIMIC's voting power now exceeding 50%, they do not expect a superior proposal to emerge before the close of the Offer.

General update on timetable and process

CIMIC has previously declared the Offer free from its defeating condition and the Offer Price as final in the absence of a competing proposal.

As a result of CIMIC's voting power in UGL increasing to more than 50%, the Offer Period has automatically been extended by 14 days and will now close at 7.00pm (AEDT) on Thursday 8 December 2016.

UGL shareholders should note CIMIC has stated that the Offer Period will not be further extended unless CIMIC obtains a relevant interest in at least 75% of UGL Shares before the close of the Offer Period, in which event the Offer Period will be extended by 14 days from the date CIMIC obtains such a relevant interest.

UGL shareholders who have already accepted the Offer, or who decide not to accept the Offer, do not need to take any further action.

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The UGL Directors encourage UGL shareholders who have not yet made a decision about whether or not to accept the Offer to read the Original Target's Statement and the Bidder's Statement having regard to their own circumstances. UGL shareholders may elect to accept the Offer, sell their UGL shares on market, or not accept the Offer. UGL shareholders should consider the UGL Directors' reasons for their recommendations as well as the risk factors which are set out in section 5.9 of the Original Target's Statement and if in any doubt as to the action that they should take, should consult a professional adviser.

Shareholders who require further information in relation to the Offer can contact the UGL Shareholder Information Line on 1300 415 866 (calls within Australia) or [phone] (calls from outside Australia). Updates in relation to the Offer will also be available on UGL's website: ugllimited.com

ENDS

FOR FURTHER INFORMATION CONTACT:
Rebecca Hill EGM Investor Relations & Corporate Development UGL Limited [phone] [e-mail] Carrie Barrack Group Investor Relations & Corporate Affairs Manager UGL Limited [phone] [e-mail]	Media please contact: Fleur Jouault GRACosway [phone] [phone]

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