Approval In-Principle: The Conversion Shares And Potential Transfer Of Controlling Interest

YONGNAM HOLDINGS LIMITED (the "Company")

(Company Registration No. 199407612N)

(Incorporated in the Republic of Singapore on 19 October 1994)

1. PROPOSED ISSUE OF 19,736,836 NEW SHARES AND (2) PROPOSED ISSUE OF S$9.5
   MILLION IN AGGREGATE PRINCIPAL AMOUNT OF NEW REDEEMABLE CONVERTIBLE BONDS TO HOLDERS OF THE EXISTING REDEEMABLE CONVERTIBLE BONDS DUE 2021

APPROVAL IN-PRINCIPLE IN RELATION TO THE CONVERSION SHARES

POTENTIAL TRANSFER OF CONTROLLING INTEREST

Unless otherwise defined, capitalised terms used in this announcement shall have the meanings ascribed to them in the Previous Announcements.

1. INTRODUCTION

The board of directors (the "Board" or "Directors") of Yongnam Holdings Limited (the "Company", and together with its subsidiaries, the "Group") refers to:-

1. the Company's announcement dated 4 June 2021 in relation to (1) the proposed issue of 19,736,836 new shares and (2) the proposed issue of S$9.5 million in aggregate principal amount of new redeemable convertible bonds to holders of the existing redeemable convertible bonds due 2021;
2. the Company's announcement dated 21 June 2021 in relation to the approval in-principle in relation to the Facilitation Payment Shares;
3. the Company's announcement dated 22 June 2021 in relation to the completion of the proposed issue of Facilitation Payment Shares; and
4. the Company's announcement dated 23 August 2021 in relation to the entry into supplemental letters to Bond Subscription Agreements.

(the "Previous Announcements")

2. APPROVAL IN-PRINCIPLE IN RELATION TO THE CONVERSION SHARES

The Board is pleased to announce that the SGX-ST has on 17 September 2021 granted its approval in-principle ("AIP") for the listing and quotation of up to 190,000,000 new ordinary shares in the capital of the Company (the "Conversion Shares") to be allotted and issued to the Existing Bondholders upon the conversion of the 2021 Bonds.

The listing and quotation of the shares is subject to the following conditions:

1. Shareholders' approval for the Proposed Bonds Issue;
2. Announcement of the conditions under which the price of the Conversion Shares may be adjusted and the conditions under which Bonds may be redeemed;

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1. A written undertaking from the Company that it will comply with Rule 704(30) and Rule 1207(20) of the Listing Manual in relation to the use of the proceeds from the proposed placement of units and where proceeds are to be used for working capital purposes, the Company will disclose a breakdown with specific details on the use of proceeds for working capital in the Company's announcements on use of proceeds and in the annual report;
2. A written undertaking from the Company that it will comply with Listing Rule 803;
3. A written confirmation from the Company that the terms of the 2021 Bonds comply with Listing Rule 829(1);
4. A written undertaking from the Company to announce any adjustment made pursuant to Listing Rule 829(1);
5. A written undertaking from the Company that it will comply with Listing Rule 831;
6. Please note the Company's obligations under Listing Rule 864(4) to notify the Exchange immediately upon any significant changes affecting any matter contained in the application, or which would be required to be included in the application if it had arisen before the application was submitted;
7. Shareholders' approval for the Potential Transfer of Controlling Interest (as defined below); and
8. A written confirmation from the Company that it will not issue the 2021 Bonds to persons prohibited under Rule 812(1) of the Listing Manual without Shareholders' approval.

The Conversion Shares will, upon allotment and issue, rank pari passu in all respects with the then existing Shares for any dividends, rights, allotments or other distributions, the record date for which falls on such date that the Bondholder is registered as the holder on record of such shares.

The AIP granted by the SGX-ST is not to be taken as an indication of the merits of the 2021 Bonds, Conversion Shares, the Company and/or its subsidiaries.

3. CONDITIONS UNDER WHICH THE PRICE OF THE CONVERSION SHARES MAY BE ADJUSTED AND THE CONDITIONS UNDER WHICH THE BONDS MAY BE REDEEMED

In accordance with the conditions of the AIP, please refer to Appendix A to this announcement for an extract of the conditions under which the conversion price of the Conversion Shares may be adjusted, and to Appendix B to this announcement for an extract of the conditions under which the 2021 Bonds may be redeemed.

4. THE POTENTIAL TRANSFER OF CONTROLLING INTEREST

As at the date of this announcement, Mr. Wang Yu Huei ("Mr. Wang"), one of the Existing Bondholders, has a deemed interest in 3,167,131 Shares held by Asdew Acquisitions Pte Ltd ("Asdew"), as he holds 99% of the share capital of Asdew.

For illustrative purposes only, assuming only Mr. Wang exercises his right to convert the 2021 Bonds, none of the other Existing Bondholders exercises their right to convert the 2021 Bonds, and only Mr. Wang is allotted and issued Conversion Shares at the minimum Conversion Price of S$0.05 amounting to 106,400,000 Shares, Mr. Wang will be (directly and deemed) interested in an aggregate of 109,567,131 Shares, representing 15.14% of the enlarged issued share capital of the Company of 723,742,767 Shares.

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Mr. Wang may thus potentially become a controlling Shareholder, depending on the exercise of the right to convert the 2021 Bonds by the Existing Bondholders. Pursuant to Rule 803 of the Listing Manual, the Company cannot issue securities to transfer a controlling interest without prior approval of Shareholders in general meeting.

Accordingly, the Company will be seeking Shareholders' approval for the potential transfer of controlling interest in the Company to Mr. Wang arising from the issue of Conversion Shares (the "Potential Transfer of Controlling Interest") at the EGM.

Mr. Wang and Asdew will abstain, and have undertaken to ensure that their associates will abstain, from voting in respect of the ordinary resolution relating to the Potential Transfer of Controlling Interest at the EGM. Further, Mr. Wang and Asdew shall decline, and shall ensure that their associates decline, to accept appointments as proxies to vote in respect of the ordinary resolution relating to the Potential Transfer of Controlling Interest for other Shareholders unless the Shareholders concerned have given specific instructions as to the manner in which their votes are to be cast in respect of the ordinary resolution relating to the Potential Transfer of Controlling Interest.

5. FURTHER ANNOUNCEMENTS

A circular containing further details of the Proposed Bonds Issue and the Potential Transfer of Controlling Interest, and enclosing a notice of extraordinary general meeting in connection therewith, will be despatched to shareholders in due course.

The Company will continue to keep shareholders updated and release announcements relating to the Proposed Transactions (including any material developments and progress made) as may be appropriate from time to time.

By Order of the Board

SEOW SOON YONG

Chief Executive Officer

20 September 2021

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APPENDIX A

The following is an extract of the conditions under which the conversion price of the Conversion Shares may be adjusted as set out in Conditions 4.3 and 4.4 of the terms and conditions of the 2021 Bonds:-

"4.3 Adjustments to the conversion price of the Bonds into Conversion Shares

The conversion price will be subject to adjustment in the following events:

1. Consolidation, Subdivision or Reclassification: If and whenever there shall be an alteration to the number of the shares as a result of consolidation, subdivision or reclassification, the conversion price of the shares of the Issuer shall be adjusted by multiplying the conversion price in force immediately before such alteration by the following fraction:

A

B

where:

1. : is the aggregate number of shares immediately before such alteration; and
2. : is the aggregate number of shares immediately after such alteration.

Such adjustment shall become effective on the date the alteration takes effect.

1. Capitalisation of profits or reserves:
2. 1. If and whenever the Issuer shall issue any shares credited as fully paid to the holders of the shares (the "Shareholders") by way of capitalisation of profits or reserves including shares paid up out of distributable profits or reserves, save where shares are issued in lieu of the whole or any part of a specifically declared cash dividend (the "Relevant Cash Dividend"), being a dividend which the Shareholders concerned would or could otherwise have received (a "Scrip Dividend") and which would not have constituted a Capital Distribution (as defined in Condition 4.4(a)), the conversion price shall be adjusted by multiplying the conversion price in force immediately before such alteration by the following fraction:

A

B

where:

1. : is the aggregate number of shares immediately before such alteration; and
2. : is the number of shares immediately after such alteration.

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1. In the case of an issue of shares by way of a Scrip Dividend where: (1) the aggregate Current Market Price (as defined in Condition 4.4(c)) of such shares; (2) (save where the Relevant Cash Dividend or the relevant part thereof and which would not have constituted a Capital Distribution exceeds the aggregate Current Market Price of such shares) the product of the then prevailing conversion price and the number of shares issued by way of such Scrip Dividend; or (3) the product of the then prevailing adjusted conversion price and the number of shares issued by way of such Scrip Dividend, exceeds the Relevant Cash Dividend or the relevant part thereof and which would not have constituted a Capital Distribution, the conversion price shall be adjusted by multiplying the conversion price in force immediately before such alteration by the following fraction:

A + B

A + C

where:

1. : is the aggregate number of shares immediately before such alteration;
2. : is the aggregate number of shares issued by way of such Scrip Dividend multiplied by a fraction which (i) the numerator is the amount of the whole, or the relevant part, of the Relevant Cash Dividend and (ii) the denominator is the highest of: (A) the aggregate Current Market Price of the shares issued by way of Scrip Dividend in respect of each existing share in lieu of the whole, or the relevant part, of the Relevant Cash Dividend, (B) the product of the then prevailing conversion price and the number of such shares issued by way of Scrip Dividend, and
   (C) the product of the then prevailing adjusted conversion price and the number of such shares issued by way of Scrip Dividend; and
3. : is the aggregate number of shares issued by way of such Scrip Dividend.

OR by making such other adjustment as a leading bank in Singapore or a financial advisory firm holding a valid financial adviser's licence under the Financial Advisers Act (Chapter 110 of Singapore) (a "Licensed FA") (acting as an expert), selected by the Issuer, and approved in writing by the Bondholders, shall certify to the Bondholders is fair and reasonable.

Such adjustment shall become effective on the date of issue of such shares or if a record date is fixed therefor, immediately after such record date.

1. Capital Distribution: If and whenever the Issuer shall pay or make any Capital Distribution to the Shareholders (save where the conversion price falls to be adjusted under Condition 4.3(b) above), the conversion price shall be adjusted by multiplying the conversion price in force immediately before such alteration by the following fraction:

A - B

A

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