Kreuz

To fellow minority shareholders of Kreuz:

I would like to highlight something regarding the offer:-

The offer is NOT the usual General Offer we normally see in other companies. It is by way of Scheme of Arrangement (SOA) under Section 210(3) of the Companies Act. SOA usually happens when a company is in financial trouble and is not able to fulfil its financial obligations. (eg. TT International with its creditors, bankers and bond holders.)

The significance of it is that once 75% of the shareholders agree to the SOA, it will be binding on ALL shareholders, regardless of whether 11% of shareholders voted against the SOA. The result would be DELISTING for Kreuz. If you consider it together with the fact that the Board of Kreuz has also agreed to strike-out any competing offers, my view is that: the Board of Kreuz, who is also the managment of Swiber, has SOLD US OUT in their desperation to raise funds to reduce Swiber's gearing against the backdrop of rising interest rate.

In fact, the management of Swiber is killing the goose that lays golden eggs (Observer2 has mentioned this earlier). Based on 3rd quarter 2013 results, total property, plant and equipment of Swiber as at 30/9/2013 was US$417m, out of which US$114.3m or 27% belongs to Kreuz. In 3Q2013, Swiber's Profit before tax was US$23.069m. Kreuz's contribution to that was US$20.508m or a whopping 88.9%. Swiber's PBT has included Share of Profit of Associates and Joint Ventures totalling US$15.870m. If one excludes it, Swiber's PBT would have been just US$7.199m. One of the reasons for Swiber's such poor performance is due to its huge finance expenses amounting to US$16m. The finance expenses has risen 50% from 3Q2012 and is expected to rise further in the next 2-3 years.

By selling its winner (Kreuz) and keeping the losers, it is making a terrible mistake what most novice investors do. So if you own shares in Swiber, please vote AGAINST the disposal at the EGM.