Asset Acquisitions and Disposals::Entry into Non-Binding Term Sheet in relation to Proposed Investment in Hiap Seng Engineering Ltd

VIBRANT GROUP LIMITED

Company Registration Number: 198600061G

ENTRY INTO NON-BINDING TERM SHEET IN RELATION TO PROPOSED INVESTMENT IN HIAP SENG ENGINEERING LTD (JUDICIAL MANAGERS APPOINTED)

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1. INTRODUCTION

The board of directors (the "Board") of Vibrant Group Limited (the "Company" and together with its subsidiaries, the "Group") wishes to announce that Vibrant Equities Pte. Ltd. ("Vibrant Equities"), an associated company of the Company has on 9 December 2021 entered into a non- binding term sheet ("Term Sheet") with Mr. Tian Yuan (Vibrant Equities and Mr. Tian Yuan hereinafter collectively referred to as the "Investors") and the judicial managers of Hiap Seng Engineering Ltd (Judicial Managers Appointed) ("Hiap Seng"), in relation to the Investors' proposed investment in Hiap Seng ("Proposed Investment").

Vibrant Equities is an investment holding company incorporated in Singapore, and held by the Company (40%), Mr. Khua Kian Hua (30%) and Mr. Khua Kian Ann, Vincent (30%). Vibrant Equities is acting as a joint venture investment vehicle through which the Group, Mr. Khua Kian Hua and

Mr. Khua Kian Ann, Vincent will invest in the Proposed Transaction (as defined below) ("Joint Venture").

The terms of the Joint Venture were arrived at on normal commercial terms, taking into account the future performance of the Proposed Transaction (as defined below). The risk and rewards of all shareholders in Vibrant Equities shall be in proportion to their investment and no single investor or group of investors shall be preferred over others.

Pursuant to the Proposed Investment:

1. Vibrant Equities and Mr. Tian Yuan shall subscribe for new ordinary shares in Hiap Seng
   ("Subscription Shares") in consideration for investing a sum of S$6.0 million and S$2.0 million in Hiap Seng respectively ("Proposed Subscription"), of which, S$2.4 million shall be contributed by the Group via Vibrant Equities; and
2. Hiap Seng shall grant to the Investors S$8.0 million of options ("Options") to subscribe for new ordinary shares of Hiap Seng ("Option Shares") ("Proposed Grant of Options"),
   collectively, the "Proposed Transaction".

Together with the Proposed Transaction, it is contemplated that Hiap Seng will also propose a settlement of certain of its unsecured financial liabilities by way of a scheme of arrangement to be approved by the creditors of Hiap Seng and sanctioned by order of the High Court of Singapore, such settlement being contemplated to be satisfied via issue of new ordinary shares of Hiap Seng

(the "Settlement Shares") and payment in cash (the "Proposed Scheme of Arrangement").

The Term Sheet sets out the key commercially agreed terms in respect of the Proposed Transaction and does not constitute an offer, agreement, agreement in principle, agreement to agree or commitment to provide financing. There is no binding commitment on the part of Vibrant

Equities to conclude the Proposed Transaction, till the negotiation, finalisation and execution of the definitive agreements relating to the Proposed Transaction ("Definitive Agreements").

2. INFORMATION ON THE PROPOSED TRANSACTION

1. Information on Hiap Seng Engineering Ltd
   Hiap Seng Engineering Ltd is a Singapore-incorporated company listed on the Mainboard of the
   Singapore Exchange Securities Trading Limited ("SGX-ST"), and prior to being placed under judicial management, was one of the leading integrated service providers of mechanical engineering, plant fabrication & installation and plant maintenance to the oil-and-gas (serving both upstream exploration and production as well as downstream refinery and storage), petrochemical and pharmaceutical industries in Singapore, Asia Pacific and other regions.
   On 28 July 2020, Hiap Seng filed an application in the High Court to be placed under judicial management ("JM") pursuant to Section 227B of the Companies' Act. On 15 September 2020, the
   High Court granted the application and made the JM order. On 6 September 2021, the High Court ordered that the JM order be extended until 13 March 2022.
2. Consideration
   The Group holds 40% interest in Vibrant Equities. The aggregate consideration for the Proposed Subscription and exercise of the Proposed Grant of Options payable by Vibrant Equities (assuming Vibrant Equities fully exercises the Options granted to it) is S$12.0 million ("Aggregate Consideration"). Accordingly, the portion of Aggregate Consideration payable by the Company for the Proposed Subscription and the exercise of the Proposed Grant of Options is S$4.8 million
   ("Consideration"), assuming that Vibrant Equities fully exercises the Options granted to it.
   The Aggregate Consideration was determined pursuant to commercial negotiations between the
   Investors and Hiap Seng's judicial managers (in good faith and on an arm's length basis). The Consideration shall be paid in cash and internally funded by the Group.
3. Rationale for the Proposed Transaction
   The Group believes that the Proposed Transaction is in line with its corporate strategy to expand its logistics business initiatives, including in the offshore oil and gas sectors where Hiap Seng was a leading service providers, and the Group believes that Hiap Seng may possibly enable the Group to pursue opportunities and growth in this sector.
4. Interested Party Transaction
   Mr. Khua Kian Hua and Mr. Khua Kian Ann, Vincent are siblings of Mr. Eric Khua Kian Keong, the Executive Director and CEO of the Group and who is deemed to be controlling shareholder of the Company by virtue of his shareholding in the holding company of the Company, Vibrant Capital Pte. Ltd.. Mr. Khua Kian Hua and Mr. Khua Kian Ann, Vincent are therefore deemed to be interested persons. Vibrant Equities, being an associated company of the Company, is regarded as "an entity at risk" within the definition set out in Chapter 9 of the Listing Manual. Accordingly, the Joint Venture is regarded as an interested party transaction.
   Under Rule 909(2) of the Listing Manual, in the case of a joint venture, the value of the transaction includes the equity participation, shareholders' loans and guarantees given by the entity at risk. The value of the participation by the Company in the Proposed Transaction following the Proposed

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Subscription and assuming full exercise of the Options granted to Vibrant Equities is 2.1% of the Group's latest net tangible assets ("NTA") for the financial year ended 30 April 2021. Accordingly, Rules 905(1) and 905(2) of the Listing Manual would not apply and the Company is not required to comply with the disclosure requirements of Rule 917 of the Listing Manual.

2.5 Discloseable Transaction

The relative figures of the Proposed Transaction computed on the bases set out in Rule 1006 Listing Manual exceed 5% but do not exceed 20%. Accordingly, the Proposed Transaction is a discloseable transaction in respect of which the approval of the shareholders of the Company is not required.

3. SALIENT TERMS OF THE TERM SHEET

3.1 Proposed Subscription

The Investors shall invest and subscribe for an aggregate amount of S$8.0 million ("Subscription Amount") in Subscription Shares, with the breakdown as follows:

Investor	Investment amount (S$ million)
Vibrant Equities Pte. Ltd.	6.0
Tian Yuan	2.0

3.2 Proposed Grant of Options

In connection with the Proposed Subscription, the Investors shall be granted Options with an aggregate value of up to S$8.0 million to further acquire shares in Hiap Seng.

The Options shall be exercisable for a period of two (2) years from completion of the Proposed

Transaction ("Completion"). The Options will be exercisable at the subscription price for each Subscription Share (the "Subscription Price") for the first 12 months from the completion of the

Proposed Transaction and shall be exercisable at a price which is a premium of approximately 10% to the Subscription Price thereafter.

The number of Options that remain unexercised shall be subject to appropriate and equitable adjustments in the event of share splits, share consolidation, recapitalisations and the like, to prevent dilution or enlargement of the benefits attributable to the Options, save that no adjustment shall be made in respect of the Proposed Rights Issue and any other corporate transactions that may be contemplated in relation to or in connection with the Resumption Proposal (as defined below).

It is contemplated that Vibrant Equities Pte. Ltd. will hold (i) approximately 48.0% of the enlarged share capital (assuming the issue of the Subscription Shares and Settlement Shares (as defined below)), if the Options are fully exercised within the first 12 months from the completion of the Proposed Transaction, and (ii) approximately 47.2% of the enlarged share capital, if the Options are fully exercised thereafter.

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1. Conditions Precedent to completion of the Proposed Transaction
   Completion of the Proposed Transaction is subject to and conditional upon the following
   ("Conditions"):
2. 1. settlement of financial liabilities by Hiap Seng and its subsidiaries with its key principal banker;
   2. settlement of Hiap Seng's unsecured financial liabilities by the Proposed Scheme of Arrangement;
   3. satisfactory completion of legal and financial due diligence by the Investors;
   4. written letter of confirmation being obtained from JTC confirming, inter alia, that it has no objection to the change of control of Hiap Seng pursuant to the Proposed Transaction and a proposed transfer of listing status of Hiap Seng to a new company to be incorporated ("Listco") by way of a scheme of arrangement pursuant to which the shareholders of Hiap Seng will be issued shares in Listco in consideration of Hiap Seng becoming a wholly- owned subsidiary of Listco (the "Proposed Transfer Listing");
   5. the grant (and not having revoked or repealed such grant) of the waiver of the obligation of the Investors to make a mandatory general offer under Rule 14 of the Singapore Code on Take-overs and Mergers for the shares not held by the Investors following the issue of the Subscription Shares and full exercise of the Options, subject to any conditions that the
      Securities Industry Council of Singapore may impose (the "Whitewash Waiver");
   6. the in-principle approval of the SGX-ST being obtained in relation to the listing and quotation of the Subscription Shares and the Option Shares;
   7. submission of a proposal for the resumption of trading by Hiap Seng taking into account, inter alia, the Proposed Transactions and the Proposed Transfer Listing (the "Resumption Proposal") and receipt of a no-objection letter from the SGX-ST indicating that it has no objection to the Resumption Proposal;
   8. approval of the shareholders of Hiap Seng being obtained at an extraordinary general meeting to be convened for, inter alia, the Proposed Transaction, the resolutions for the Whitewash Waiver and transfer of controlling interest to the Investors, and the Proposed Transfer Listing; and
   9. Hiap Seng having obtained all consents, approvals and authorisations of or notices to other persons necessary for it to enter into the Proposed Transaction, and to perform its obligations in connection with the foregoing.
3. Completion and Longstop Date
   Completion of the Proposed Transaction shall be within 14 days from the confirmation by Hiap Seng and the Investors that the Conditions have been fulfilled.
   The Proposed Transaction shall be completed no later by 31 July 2022, and any extension shall be mutually agreed (the "Longstop Date").

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3.5 Post-completion corporate action

The Parties to the Term Sheet have also agreed that after the completion of the Proposed Transaction, Hiap Seng will undertake a rights issue to raise up to S$3.0 million (the "Proposed Rights Issue"), where the current key management team of Hiap Seng, through an investment vehicle, will undertake to subscribe for their entitlement to the new shares to be issued under the Proposed Rights Issue, and any excess Shares thereunder, amounting to a total of S$1.0 million.

The Investors will not have the rights to participate in the Proposed Rights Issue.

4. RELATIVE FIGURES UNDER CHAPTER 10 OF THE LISTING MANUAL

The relative figures computed on the relevant bases set out in Rule 1006 of the Listing Manual in respect of the Proposed Transaction is as follows:

Rule	Bases	Relative Figures
(%)
1006(a)	The net asset value of the assets to be disposed of, compared	Not applicable(1)
with the Group's net asset value
1006(b)	The net profits attributable to the assets acquired or disposed of,	Not meaningful(2)
compared with the Group's net profits
	The aggregate value of the consideration given or received,
1006(c)	compared with the Company's market capitalisation based on the	7.89(3)
	total number of issued shares excluding treasury shares
	The number of equity shares issued by the Company as
1006(d)	consideration for an acquisition, compared with the number of	Not applicable(4)
	equity shares previously in issue

Notes:

1. Rule 1006(a) is not applicable to an acquisition of assets.
2. The net profits attributable to the assets to be acquired are not publicly available to the Group as at the date of this announcement. Hiap Seng is under judicial management and had sought multiple extensions of time for the release of its financial results, with its most recent financial statements being released on 14 August 2020 for the first quarter ended 30 June 2020 ("14 August Announcement"). In view of the above and the fact that Hiap Seng intends to undertake the Proposed Scheme of Arrangement, it would not be meaningful to compute the relative figure using the numbers in the 14 August Announcement.
3. Based on the Consideration of S$4.8 million and the market capitalisation of the Company being $60.9 million, which is calculated based on the weighted average price of S$0.0879 per Share as at 8 December 2021, being the last trading day for the Company's shares preceding the date of execution of the Term Sheet.
4. Not applicable, as equity securities are not issued by the Company as consideration for the Proposed Transaction.

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