KENCANA AGRI LIMITED - listed companykencana.listedcompany.com/newsroom/20101104_074618... · 04/11/2010 · the Company held by its wholly-owned subsidiary, Newbloom, and is thus

CIRCULAR DATED 4 NOVEMBER 2010

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take, you should consult your stockbroker,bank manager, accountant, solicitor or other professional advisors immediately.

If you have sold or transferred all your shares in the capital of Kencana Agri Limited (the “Company”),you should immediately forward this Circular together with the Notice of Extraordinary General Meetingand the accompanying Proxy Form to the purchaser or transferee or to the bank, stockbroker or otheragent through whom the sale or transfer was effected for onward transmission to the purchaser ortransferee.

The Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for thecorrectness of any of the statements made, reports contained or opinions expressed in this Circular.

KENCANA AGRI LIMITED(Incorporated in the Republic of Singapore)

(Company Registration Number: 200717793E)

CIRCULAR TO SHAREHOLDERS

in relation to:-

THE PROPOSED MANDATE FOR INTERESTED PERSON TRANSACTIONS

Independent Financial Advisor in relation to the Adoption of the Mandate for Interested Person Transactions

IMPORTANT DATES AND TIMES

Last date and time for lodgement of Proxy Form : 20 November 2010 at 2.30 p.m.

Date and time of Extraordinary General Meeting : 22 November 2010 at 2.30 p.m.

Venue of Extraordinary General Meeting : Suntec Singapore International Convention &Exhibition CentreMeeting Room 3131 Raffles Boulevard Suntec CitySingapore 039593

DEFINITIONS .................................................................................................................................... 3

LETTER TO SHAREHOLDERS ........................................................................................................ 6

1. INTRODUCTION ...................................................................................................................... 6

72. THE PROPOSED ADOPTION OF THE IPT MANDATE ........................................................ 7

2.1 Scope of the IPT Mandate ............................................................................................ 7

2.2 The Interested Persons.................................................................................................. 10

2.3 Rationale ........................................................................................................................ 10

2.4 Benefits of the Transactions with the Wilmar Group and its associates ........................ 10

2.5 Review Procedures for the Interested Person Transactions .......................................... 11

2.6 Register of Interested Person Transactions .................................................................. 13

2.7 Review by Audit Committee .......................................................................................... 13

2.8 Validity Period of the IPT Mandate ................................................................................ 13

2.9 Disclosure of Interested Person Transactions pursuant to the IPT Mandate ................ 13

2.10 Opinion of HLB .............................................................................................................. 13

2.11 Statement of the Audit Committee ................................................................................ 14

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN THE COMPANY.... 14

4. DIRECTORS’ RECOMMENDATIONS .................................................................................... 15

5. EXTRAORDINARY GENERAL MEETING .............................................................................. 15

6. ACTION TO BE TAKEN BY SHAREHOLDERS ...................................................................... 15

7. SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING .................................................... 15

8. DIRECTORS’ RESPONSIBILITY STATEMENT ...................................................................... 15

9. CONSENTS ............................................................................................................................ 16

10. DOCUMENTS AVAILABLE FOR INSPECTION .................................................................... 16

APPENDIX I….................................................................................................................................... 17

APPENDIX II ...................................................................................................................................... 19

NOTICE OF EXTRAORDINARY GENERAL MEETING.................................................................... 25

TABLE OF CONTENTS

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In this Circular and the Appendices hereto the following definitions apply throughout except where thecontext otherwise requires or it is otherwise stated:

“Acquisition” : The acquisition by Newbloom of 79,608,944 existing Shares fromKencana Holdings Pte. Ltd.

“Articles” : The Articles of Association of the Company

“Audit Committee” : The audit committee of the Company comprising Mr Soh YewHock, Mr Leung Yew Kwong and Tengku Alwin Aziz

“Board” : The Board of Directors of the Company as at the date of thisCircular

“CDP” : The Central Depository (Pte) Limited

“Circular” : This shareholders’ circular to the Shareholders

“Companies Act” : The Companies Act, Chapter 50 of Singapore, as amended ormodified from time to time

“Company” : Kencana Agri Limited

“Control” : The capacity to dominate decision-making, directly or indirectly,in relation to the financial and operating policies of the Company

“Controlling Shareholder” : In relation to a listed company, a person who

(a) holds directly or indirectly 15% or more of the total numberof issued shares in the Company excluding treasuryshares. The SGX-ST may determine that a person whosatisfies the above is not a Controlling Shareholder; or

(b) in fact exercises Control over the Company

“Director” : A director of the Company as at the date of this Circular

“EGM” : The Extraordinary General Meeting of the Company to beconvened on 22 November 2010, notice of which is given onpage 25 of this Circular

“FY” : Financial year ended or ending 31 December

“Group” : The Company, its subsidiaries and associated companies

“HLB” : HL Bank

“IFA Letter” : The letter dated 4 November 2010 from HLB to the IndependentDirectors in relation to the adoption of the IPT Mandate, a copyof which is set out in Appendix II to this Circular

“Independent Directors” : The Directors who are considered independent for the purposeof making a recommendation to Shareholders on the adoption ofthe IPT Mandate, namely, Mr Henry Maknawi, Tengku Alwin Aziz,Ms Ratna Maknawi, Mr Kent Surya, Mr Soh Yew Hock, Mr LeungYew Kwong and Mr Sim Idrus Munandar

DEFINITIONS

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“Independent Financial : HLB, being the independent financial advisor to the IndependentAdvisor” or “IFA” Directors for the IPT Mandate

“Independent Shareholders” : The Shareholders other than Newbloom and its associates in thecontext of, and having regard to, the proposed subscription andsale of shares

“Interested Person : Transactions proposed to be entered into between the Group andTransactions” the Interested Persons

“Interested Persons” : The Wilmar Group and their respective associates (as defined inthe Listing Manual), and “Interested Person” means any one ofthem

“Internal Auditors” : The internal auditors of the Company

“IPT Mandate” : A Shareholders’ general mandate pursuant to Chapter 9 of theListing Manual permitting the Company, its subsidiaries andassociated companies or any of them, to enter into InterestedPerson Transactions with the Interested Persons

“Kencana Holdings” : Kencana Holdings Pte. Ltd.

“Latest Practicable Date” : The latest practicable date prior to the printing of this Circular,being 29 October 2010

“Listing Manual” : The Listing Manual of the SGX-ST, as amended, modified orsupplemented from time to time

“Newbloom” : Newbloom Pte Ltd

“Relevant Period” : The six month period commencing on 1 January 2010 andending on 30 June 2010

“Securities Account” : A securities account maintained by a Depositor with CDP but notincluding a securities sub-account

“Senior Executives” : The senior executives of the Company (with no interest, direct orindirect, in the relevant Interested Person Transaction), for thepurposes of the review procedures described in Section 2.5(Review Procedures for Interested Person Transactions) below,consisting of the Executive Director of the Company/Head ofCommercial and General Manager of various departments of theGroup.

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share Registrar” : Boardroom Corporate & Advisory Services Pte Ltd

“Shareholders” : The registered holders of Shares, except that where theregistered holder is CDP, the term “Shareholders” shall, inrelation to those Shares, mean the Depositors whose SecuritiesAccounts are credited with Shares

“Shares” : Ordinary shares in the capital of the Company

DEFINITIONS

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“Subscription and Share : The subscription and sale of shares agreement entered into on Sale Agreement” 13 August 2010 between the Company, Kencana Holdings and

Newbloom, a wholly-owned subsidiary of Wilmar

“Subsidiaries” : Has the meaning as ascribed to it by Section 5 of the CompaniesAct

“Substantial Shareholder” : Has the meaning as ascribed it by Section 81 of the CompaniesAct

“Transaction” : Has the meaning as ascribed to it in Section 1.1 of this Circular

“Wilmar” : Wilmar International Limited

“Wilmar Group” : Wilmar, its subsidiaries, including but not limited to Newbloom,and associated companies

“%” : Per centum or percentage

“S$” and “cents” : Singapore dollars and cents, respectively

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed tothem respectively in Section 130A of the Companies Act.

Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine gender and vice versa.References to persons shall include corporations.

Any reference to a time of day in this Circular shall be a reference to Singapore time unless otherwisestated.

Any reference in this Circular to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any term defined under the Companies Act or the Listing Manual or anymodification thereof and used in this Circular shall, where applicable, have the meaning ascribed to itunder the Companies Act or the Listing Manual or such modification thereof, as the case may be, unlessotherwise provided.

DEFINITIONS

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KENCANA AGRI LIMITED(Incorporated in the Republic of Singapore)

(Company Registration Number: 200717793E)

Board of Directors:- Registered Office:

Mr. Henry Maknawi, Chairman and Chief Executive Officer 3 Shenton WayTengku Alwin Aziz, Vice-Chairman and Non-Executive Director #10-06 Shenton HouseMs. Ratna Maknawi, Deputy Chief Executive Officer Singapore 068805Mr. Kent Surya, Finance DirectorMr. Soh Yew Hock, Lead Independent DirectorMr. Leung Yew Kwong, Independent DirectorMr. Teo Kim Yong, Non-Executive DirectorMr. Ang Kok Min, Alternate Director to Mr. Teo Kim YongMr. Sim Idrus Munandar, Independent Director

4 November 2010

To: The Shareholders of Kencana Agri Limited,

Dear Sir/Madam


1. INTRODUCTION

1.1 On 13 August 2010, the Company announced that the Company, together with its majorityshareholder, Kencana Holdings had entered into the Subscription and Share Sale Agreement withNewbloom, a wholly-owned subsidiary of Wilmar.

Subject to and upon the terms of the Subscription and Share Sale Agreement, Newbloom shallacquire 229,608,944 Shares representing 20.0% of the share capital of the Company on anenlarged basis by way of:

(a) a subscription of 150,000,000 new Shares to be allotted and issued by the Company; and

(b) the acquisition of 79,608,944 existing Shares from Kencana Holdings,

(collectively, the “Transaction”).

1.2 The Transaction was completed on 2 September 2010. As at the Latest Practicable Date, Wilmar isdeemed to be interested in the 229,608,944 Shares representing 20.00% of the share capital ofthe Company held by its wholly-owned subsidiary, Newbloom, and is thus a ControllingShareholder under the meaning of the Listing Manual.

1.3 Based on the consolidated management accounts of the Company for the Relevant Period, (a)sales to the Wilmar Group in the ordinary course of business of the Company contributed toapproximately 57.7% of the Group’s revenue; and (b) purchases from the Wilmar Group in theordinary course of business of the Company contributed to approximately 4.0% of the Group’s totalcost of sales.

1.4 The Directors are convening an EGM to be held on 22 November 2010 to seek Shareholders’approval for the proposed adoption of the IPT Mandate to facilitate the continued trading in theordinary course of business between the Group and the Wilmar Group, notwithstanding its statusas a Controlling Shareholder of the Company.

LETTER TO SHAREHOLDERS

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The purpose of this Circular is to provide Shareholders with the relevant information relating to theproposal to be tabled at the EGM.

2. THE PROPOSED ADOPTION OF THE IPT MANDATE

2.1 Scope of the IPT Mandate

2.1.1 The Proposed IPT Mandate

The Group has an extensive trading relationship with the Wilmar Group, and intends tocontinue entering into trading transactions in the ordinary course of business with theWilmar Group following the completion of the Transaction, including but not limited to thetransactions set out in this Section 2. These transactions will occur frequently in theordinary course of the Group’s business and could arise at any time and from time to time.To facilitate such transactions, the Company proposes to obtain the approval of theShareholders at the EGM to adopt the proposed IPT Mandate, which will authorise theGroup to enter into Interested Person Transactions as set out in Section 2.1.2 below.

HLB has, in accordance with Chapter 9 of the Listing Manual, been appointed as theindependent financial advisor to the Independent Directors in respect of the proposed IPTMandate.

General information relating to Chapter 9 of the Listing Manual, including terms such as“interested person”, “associate”, “associated company” and “controlling shareholder”, areset out in Appendix I to this Circular.

2.1.2 The Nature of the Interested Person Transactions

(a) Transactions entered into with the Wilmar Group and its associates

Transactions with the Wilmar Group and its associates to be covered by theproposed IPT Mandate include transactions comprising the buying and sellingbetween the Group and the Interested Persons of crude palm oil, crude palm kerneloil and other items, whether pursuant to existing contracts and/or arrangements orotherwise.

The Group typically enters into such trading transactions with the Wilmar Group fromtime to time in consideration of better logistical efficiency, as well as to hedge againstmarket volatility in the prices of various products, commodities and services. Toillustrate, the Group may purchase crude palm oil from the Wilmar Group to matchagainst the Group’s sales to customers in order to minimize shipment costs due togeographical considerations. The Group may also sell to the Wilmar Group fresh fruitbunch where the Group currently has no processing plants located closer to certainof the Group’s plantations. This applies similarly to transportation services, where theGroup may engage the services of vessels belonging to the Wilmar Group where theGroup’s vessels are out of port.

(i) Sale and Purchase of Crude Palm Oil, Refined Bleached Deodorized PalmOlein, Coconut Oil and Crude Palm Kernel Oil

The Group sells and purchases crude palm oil, refined bleached deodorizedpalm olein, coconut oil and crude palm kernel oil to and from the WilmarGroup and its associates pursuant to sale and purchase agreements enteredinto on a periodic basis.


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Under the sale and purchase agreements, the Group agrees to sell orpurchase (as the case may be) crude palm oil, refined bleached deodorizedpalm olein, coconut oil and crude palm kernel oil to the Wilmar Group and itsassociates on the terms and subject to the conditions of such agreements.Typically, prices established online are quoted up to three (3) to five (5)months forward. The Group enters into long term contracts to manage theprice risk of its physical inventory and to hedge against fluctuations incommodity prices, which are subject to factors such as the weather,government policy, level of demand and supply in the market, the globaleconomic environment and global production of similar and competitive crops.

Based on the management accounts of the Company for the Relevant Period,the value of the trading transactions between the Group and the Wilmar Groupin respect of these products are as follows:

Product Sales Purchases(% of revenue) (% of cost of sales)

(US$ ‘000) (US$ ‘000)

Crude palm oil 22,498.3 (46.8%) 1,511.1 (4.0%)

Refined bleached deodorized – –palm olein

Coconut oil 998.4 (2.1%) –

Crude palm kernel oil 2,759.3 (5.7%) –

(ii) Purchases of fertiliser

The Group purchases fertiliser from the Wilmar Group and its associatespursuant to purchase agreements entered into on a periodic basis.

Under the purchase agreements, the Group agrees to purchase fertiliser fromthe Wilmar Group and its associates on the terms and subject to theconditions of such agreements. The Group enters into purchase contracts tomanage the price risk of the fertiliser, which are volatile and subject to factorssuch as the oil prices, government policy, level of demand and supply in themarket and the global economic environment.

The Group has not purchased any fertiliser from the Wilmar Group since itslast purchase of fertiliser for an amount of approximately US$2,757,400 in thefinancial year ended 31 December 2008. However, the Group anticipates thatit may, in the ordinary course of business, purchase fertiliser from the WilmarGroup in future.

(iii) Sale and Purchase of Other Items

The Group sells and purchases fresh fruit bunch, palm kernel, palm kernelcake and other palm products to and from the Wilmar Group and itsassociates pursuant to sale and purchase agreements entered into on aperiodic basis.


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Under the sale and purchase agreements, the Group agrees to sell orpurchase (as the case may be) fresh fruit bunch, palm kernel and palm kernelcake to and from the Wilmar Group and its associates on the terms andsubject to the conditions of such agreements. The Group enters into long termcontracts to manage the price risk of its physical inventory and to hedgeagainst fluctuations in commodity prices, which are subject to factors such asthe weather, government policy, level of demand and supply in the market, theglobal economic environment and global production of similar and competitivecrops.

Based on the management accounts of the Company for the Relevant Period,the value of the trading transactions between the Group and the Wilmar Groupin respect of these products are as follows:

Product Sales Purchases(% of revenue) (% of cost of sales)

(US$ ‘000) (US$ ‘000)

Fresh fruit bunch 1,070.6 (2.2%) –

Palm kernel – –

Palm kernel cake – –

Other palm products – –

(iv) Provision and engagement of services

The Group may provide processing, storage and transportation services to theWilmar Group and its associates for the processing, storage andtransportation of crude palm oil, crude palm kernel oil and other palmproducts. Vice versa, the Wilmar Group and its associates may also providesuch services to our Group. The Group may enter into service agreements tomanage its operations and provide such services to the Wilmar Group and itsassociates in order to optimise the utilisation capacity in the areas ofprocessing, storage and transportation.

Based on the management accounts of the Company for the Relevant Period,the value of the transactions between the Group and the Wilmar Group inrespect of these services are as follows:

Services Sales Purchases(% of revenue) (% of cost of sales)

(US$ ‘000) (US$ ‘000)

Processing – –

Storage 3.5 (0.0%) –

Transportation 447.0 (0.9%) –

(b) Transactions not covered by the IPT Mandate

Transactions with the Interested Persons which do not fall within the ambit of theproposed IPT Mandate shall be subject to the relevant provisions of Chapter 9 of theListing Manual and/or other applicable provisions of the Listing Manual.


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The proposed IPT Mandate will not cover any transaction by the Group withInterested Persons that is below S$100,000 in value as the threshold andaggregation requirements of Chapter 9 of the Listing Manual would not apply to suchtransactions. In addition, the IPT Mandate will not include transactions for thepurchase or sale of assets, undertakings or businesses.

2.2 The Interested Persons

Under the proposed IPT Mandate, the Interested Persons will comprise the Wilmar Group and itsassociates, each of which are deemed to be Interested Persons that the Group will be transactingwith.

About Wilmar

Wilmar, founded in 1991, is today Asia’s leading agribusiness group. It ranks amongst the largestlisted companies by market capitalisation on the SGX-ST.

Its business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumerpack edible oils processing and merchandising, specialty fats, oleochemicals and biodieselmanufacturing, and grains processing and merchandising. Headquartered in Singapore, itsoperations are located in more than 20 countries across four continents, with a primary focus onIndonesia, Malaysia, China, India and Europe. Backed by a multi-national staff force of more than80,000 people, over 300 processing plants and an extensive distribution network, its products aresold to more than 50 countries globally.

2.3 Rationale

The proposed IPT Mandate, is intended to facilitate transactions in the ordinary course of businessof the Group which are recurrent in nature and may be transacted from time to time with theInterested Persons provided that they are carried out on normal commercial (or, in the absence ofother similar comparable transactions, commercially reasonable) terms and are not prejudicial tothe interests of the Company and its minority Shareholders.

The Group has an extensive trading relationship with the Wilmar Group. It is thus impractical for theCompany to announce and/or convene separate general meetings on each occasion to seekShareholders’ approval for, the entry by the Group into such transactions. The IPT Mandate isintended to enable the Group to conduct its ordinary business of trading in crude palm oil andother items with the Wilmar Group, which is time-sensitive and recurring in nature.

The IPT Mandate will also substantially reduce administrative time and expenses associated withthe making of such announcements or the convening of general meetings from time to time, andallow manpower resources to be focused towards other corporate and business opportunities.

2.4 Benefits of the Transactions with the Wilmar Group and its associates

Wilmar is currently Asia’s leading agribusiness group and the largest purchaser of crude palm oiland crude palm kernel oil in the region, the primary products of the Company.

The Wilmar Group is also a major trading partner of the Group and based on the consolidatedmanagement accounts of the Company for the Relevant Period, (a) sales to the Wilmar Group inthe ordinary course of business of the Company contributed to approximately 57.7% of the Group’srevenue; and (b) purchases from the Wilmar Group in the ordinary course of business of theCompany contributed to approximately 4.0% of the Group’s total cost of sales.

It is thus critical to the continued growth and development of the Group that trading transactions inthe ordinary course of business between the Group and the Wilmar Group remain unfettered.


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2.5 Review Procedures for the Interested Person Transactions

To ensure that the Interested Person Transactions are conducted on normal commercial (or, in theabsence of other similar comparable transactions, fair and reasonable) terms and will not beprejudicial to the interests of the Company and its minority Shareholders, as a general rule theGroup will only enter into transactions with the Interested Persons if the terms offered by orextended to the Interested Persons are no less or more favourable than the terms that may beobtainable from or extended to unrelated third parties.

2.5.1 Review Procedures

To ensure that the Interested Person Transactions are conducted at an arm’s length basisand on normal commercial terms consistent with the Group’s usual business practices andon terms which are generally not more favourable than the usual commercial termsextended to unrelated third parties, the Company has adopted and/or will adopt thefollowing procedures for the review and approval of Interested Person Transactions underthe IPT Mandate:

(a) All sale and purchase agreements with external reference quoted price entered intowith Interested Persons are to be carried out based on the prevailing marketreference price available on established exchanges and/or established marketreferences which are acceptable to the Audit Committee and is calculated byreference to any fair pricing basis to be determined and agreed by at least two (2)Senior Executives of the Company and reviewed quarterly by the Audit Committee.

(b) Any other sale and purchase contracts without external reference quoted prices orrates and all service agreements entered into with an Interested Person are to becarried out with reference to at least two (2) non-Interested Person price or rateindependent quotation of a similar nature. In determining the most competitive priceand/or attractive terms to the Group, non-price factors, including but not limited toquality, delivery time, vessel condition, vessel location and track record will be takeninto account.

All other terms and conditions of the sale and purchase contracts under the IPTMandate will remain substantially the same as when Wilmar was not yet anInterested Person. The Audit Committee has approved the template contracts to beused under the IPT Mandate. Any deviation of material terms and conditions fromthe template contracts will require the approval of the Audit Committee before it canbe adopted.

2.5.2 Threshold limits

In addition to the review procedures, the Group supplements its internal systems by settingthreshold limits to its transactions, to ensure that all categories of Interested PersonTransactions are undertaken with Interested Persons on an arm’s length basis and onnormal commercial terms as follows:

(a) a Category 1 transaction is one where in relation to:

(i) the sale and purchase contracts with external reference quoted price, thetransaction with an Interested Person is below or equal to US$4,000,000; and

(ii) any other sale and purchase contracts without external reference quoted priceor rate and service agreements, the transaction with an Interested Person isbelow or equal to US$400,000;


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(b) a Category 2 transaction is one where in relation to:

(i) the sale and purchase contracts with external reference quoted price, thetransaction with an Interested Person is in excess of US$4,000,000; and

(ii) any other sale and purchase contracts without external reference quoted priceor rate and service agreements, the transaction with an Interested Person is inexcess of US$400,000.

Category 1 transactions do not require the prior review and approval of the AuditCommittee before the transaction is entered into but shall be reviewed on a quarterly basisby the Audit Committee. Category 2 transactions must be reviewed and approved by theAudit Committee prior to being contracted.

The thresholds of US$4,000,000 and US$400,000 are set as limits based on expected andpast sale and purchases volume of the Group. It also balances the requirement ofcommercial efficiency and the requirements of oversight by the Audit Committee. Havingconsidered the current market prices, the prevailing market conditions and the expectedsale volume, the Board is of the opinion that the threshold limits of US$4,000,000 andUS$400,000 reflect a risk control level that is acceptable to the Company.

In the event that a member of the Audit Committee (where applicable) is interested in anyInterested Person Transaction, he will abstain from reviewing that particular transaction toensure that the Interested Person Transaction will be carried out on normal commercialterms. Approval of that transaction will accordingly be undertaken by the remainingmembers of the Audit Committee.

2.5.3 Other review procedures

In addition to the review procedures set out above, the following have been/will also beimplemented:

(a) The Company shall, on a quarterly basis, report to the Audit Committee on allInterested Person Transactions and the basis on which such transactions wereentered into with the Interested Persons during the preceding quarter. The InternalAuditors will review all of such Interested Person Transactions on a quarterly basisand come up with a quarterly internal audit report. The Audit Committee shall reviewsuch internal audit report on the Interested Person Transactions at its quarterlymeetings except where any Interested Person Transactions requires the approval ofthe Audit Committee prior to the transaction.

(b) The Company’s annual internal audit plan shall also include a review of theestablished review procedures for the monitoring of such Interested PersonTransactions entered into during the current financial year. As part of the Company’sannual audit, external auditors will be appointed by the Company to review allInterested Person Transactions with an Interested Person on an annual basis. TheInternal Auditors shall report directly to the Audit Committee. The external auditorswill review and confirm the Interested Person Transactions under the notes to thefinancial statements.

(c) For the purpose of the above review and approval process, any Director, who has aninterest in the Interested Person Transaction under review and is not considered tobe independent, will abstain from voting on any resolution relating to the InterestedPerson Transaction and/or abstain from participating in the Audit Committee’sdecision during its review of the established review procedures for the InterestedPerson Transaction or during its review or approval of any Interested PersonTransaction.


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2.6 Register of Interested Person Transactions

The Company will maintain a register of all transactions carried out with the Interested Personspursuant to the IPT Mandate and shall include all information pertinent to the evaluation of theInterested Person Transactions such as, but not limited to the amount of the Interested PersonTransactions, the basis for determining the transaction prices and supporting evidence andquotations obtained to support such basis.

The register of Interested Person Transactions shall be prepared, maintained and monitored bypersonnel of the Company (who shall not be interested in any of the Interested PersonTransactions) who is duly delegated to do so by the Audit Committee and reviewed by InternalAuditors on a quarterly basis and by external auditors on an annual basis.

2.7 Review by Audit Committee

As mentioned in Section 2.5 the Audit Committee shall review the quarterly internal audit reportson the Interested Person Transactions to ascertain that the established review procedures formonitoring the Interested Person Transactions have been complied with.

If during these quarterly reviews, the Audit Committee is of the view that the review procedures asstated above have become inappropriate or insufficient in view of changes to the nature of, or themanner in which, the business activities of the Company are conducted, to ensure that themandated Interested Person Transactions will be conducted based on the Company’s normalcommercial terms and hence, will not be prejudicial to the interests of the Company and itsminority Shareholders, the Company will then revert to Shareholders for a fresh mandate based onnew guidelines and procedures for transactions with the Interested Persons to ensure thatInterested Person Transactions will be on an arm’s length basis and on normal commercial terms.During the period prior to obtaining a fresh mandate from the Shareholders, all Interested PersonTransactions will be subject to prior review and approval by the Audit Committee.

If any member of the Audit Committee has an interest in a transaction, he shall abstain fromparticipating in the review and approval process in relation to that transaction

2.8 Validity Period of the IPT Mandate

The IPT Mandate will take effect from the passing of the ordinary resolution relating thereto, andwill (unless revoked or varied by the Company in general meeting) continue in force until the nextannual general meeting of the Company. Approval from the Shareholders will be sought for therenewal of the IPT Mandate at the next annual general meeting and at each subsequent annualgeneral meeting of the Company, subject to satisfactory review by the Audit Committee of itscontinued application to the transactions with the Interested Persons.

2.9 Disclosure of Interested Person Transactions pursuant to the IPT Mandate

The Company will announce the aggregate value of transactions conducted with the InterestedPersons pursuant to the IPT Mandate for the relevant financial periods which the Company isrequired to report on pursuant to the Listing Manual and within the time required for theannouncement of such reports.

Disclosure will also be made in the Company’s annual report of the aggregate value oftransactions conducted with the Interested Persons pursuant to the IPT Mandate during thefinancial year, and in the annual reports for subsequent financial years that the IPT Mandatecontinues in force, in accordance with the requirements of Chapter 9 of the Listing Manual.

2.10 Opinion of HLB

HLB, in arriving at its opinion in respect of the proposed IPT Mandate, has considered, inter alia,the review procedures set up by the Company, the role of the Audit Committee in enforcing theproposed IPT Mandate and the rationale for and benefits of the proposed IPT Mandate.


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Having regard to the considerations set out in the IFA letter and the information available to HLBas at the Latest Practicable Date, HLB is of the opinion that the review procedures set up by theCompany for determining transaction terms of the Interested Person Transactions are sufficient toensure that the Interested Person Transactions will be carried out on normal commercial terms andwill not be prejudicial to the interests of the Company and its minority Shareholders.

2.11 Statement of the Audit Committee

Having considered, inter alia, the terms, the rationale for and the benefits of the proposed IPTMandate, the Audit Committee is satisfied that the methods or procedures proposed by theCompany as set out in Section 2.5 of this Circular for determining transaction prices of InterestedPerson Transactions are sufficient to ensure that the Interested Person Transactions will be carriedout on normal commercial (or, in the absence of other similar comparable transactions, fair andreasonable) terms and will not be prejudicial to the interests of the Company and its minorityShareholders.

3. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN THE COMPANY

As at the Latest Practicable Date, save as disclosed below, none of the Directors has any interestin the Shares of the Company. The interests of the Directors and Substantial Shareholders in theShares as at the Latest Practicable Date are set out below:

As at Latest Practicable Date

Direct Interest Deemed Interest (No. of Shares) % (No. of Shares) %

Directors

Henry Maknawi(1) 7,099,880 0.62 610,220,896 53.15

Ratna Maknawi – – 5,666,120 0.49

Tengku Alwin Aziz 1,675,880 0.15 – –

Kent Surya 837,440 0.07 – –

Soh Yew Hock 200,000 0.02 – –

Leung Yew Kwong 400,000 0.03 – –

Teo Kim Yong – – – –

Ang Kok Min – – – –

Sim Idrus Munandar – – – –

Substantial Shareholders

Kencana Holdings Pte. Ltd. 610,220,896 53.15 – –

Newbloom Pte Ltd 229,608,944 20.00 – –

Wilmar International Limited(2) – – 229,608,944 20.00

Notes:

(1) Mr Henry Maknawi is deemed to be interested in the shares held by Kencana Holdings Pte. Ltd. by virtue of his43.41% shareholding interest in Kencana Holdings Pte. Ltd.

(2) Wilmar International Limited is deemed to be interested in the shares held by Newbloom Pte Ltd, its wholly-ownedsubsidiary.


14

4. DIRECTORS’ RECOMMENDATIONS

Having considered, inter alia, the terms, the rationale for and the benefits of the proposed IPTMandate and the opinion of HLB, the Independent Directors are of the view that the proposed IPTMandate is in the interests of the Company and accordingly recommend that Shareholders vote infavour of the resolution relating to the adoption of the proposed IPT Mandate as set out in thenotice of EGM on page 25 of this Circular.

Mr. Teo Kim Yong and his alternate, Mr Ang Kok Min, being executives of the Wilmar Group, haveabstained from making any recommendation on the IPT Mandate.

5. EXTRAORDINARY GENERAL MEETING

The EGM, notice of which is set out on page 25 of this Circular, will be held at Suntec SingaporeInternational Convention & Exhibition Centre Meeting Room 313 1 Raffles Boulevard Suntec CitySingapore 039593 on 22 November 2010 at 2.30 p.m., for the purpose of considering and, ifthought fit, passing, the resolution set out in the notice of EGM.

6. ACTION TO BE TAKEN BY SHAREHOLDERS

A Shareholder who is unable to attend the EGM and wishes to appoint a proxy to attend and voteon his behalf, may complete, sign and return the proxy form attached to the notice of EGM inaccordance with the instructions printed thereon as soon as possible and in any event so as toreach the registered office of the Company at 3 Shenton Way #10-06 Shenton House Singapore068805, not later than 2.30 p.m. on 20 November 2010. The completion and return of the proxyform by a Shareholder will not prevent him from attending and voting at the EGM, if he wishes todo so, in place of his proxy.

A Depositor shall not be regarded as a member of the Company entitled to attend the EGM and tospeak and vote thereat unless his name appears on the Depository Register maintained by theCDP, pursuant to Division 7A of Part IV of the Companies Act, at least 48 hours before the EGM.

7. SHAREHOLDERS WHO WILL ABSTAIN FROM VOTING

By virtue of its interest in the IPT Mandate, Newbloom, holding direct interests of 20.0% in theshare capital of the Company, will abstain and has undertaken to ensure that its associates willabstain from voting on the ordinary resolution relating to the proposed adoption of the IPT Mandateat the forthcoming EGM.

Further, Newbloom undertakes to decline to accept appointment as proxies to vote and attend atthe forthcoming EGM in respect of the ordinary resolution relating to the proposed adoption of theIPT Mandate for other Shareholders of the Company unless the Shareholder concerned shall havegiven specific instructions as to the manner in which his votes are to be cast.

8. DIRECTORS’ RESPONSIBILITY STATEMENT

The issue of this Circular to Shareholders has been seen and approved by all the Directors who(including those who may have delegated supervision of this Circular) have taken all reasonablecare to ensure that the facts stated and the opinions expressed (excluding those expressed byHLB in the IFA Letter and, in the case of the Directors who are not Independent Directors, theIndependent Directors’ recommendations) in this Circular are fair and accurate in all materialrespects and that no material facts have been omitted which would make any such informationmisleading in any material respect. However, in respect of the IFA Letter, the sole responsibility ofthe Directors has been to ensure that the facts stated with respect to the Group are fair andaccurate in all material respects. The Directors jointly and severally accept responsibilityaccordingly.


15

9. CONSENTS

HLB has given and has not withdrawn its written consent to the issue of this Circular with theinclusion of its name and the letter containing its advice to the Independent Directors (attached tothis Circular as Appendix II) and all references thereto, in the form and context in which theyappear in this Circular.

10. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents are available for inspection at the registered office of the Company at 3Shenton Way #10-06 Shenton House Singapore 068805 during normal business hours from thedate of this Circular up to the date of the EGM:

(a) the Annual Report of the Company for the financial year ended 31 December 2009;

(b) the IFA Letter; and

(c) the letter of consent of HLB referred to in Section 9 of this Circular.

Yours Faithfully

For and on behalf of the Board of Directors of Kencana Agri Limited

Henry Maknawi Chairman and Chief Executive Officer


16

GENERAL INFORMATION RELATING TO CHAPTER 9 OF THE LISTING MANUAL

SCOPE

Chapter 9 of the Listing Manual applies to transactions which an entity at risk proposes to enter into witha counterparty who is an interested person of the entity at risk.

DEFINITIONS

An “entity at risk” means the issuer, any of its subsidiaries (other than subsidiaries that listed on anapproved stock exchange) or any of its associated companies (other than associated companies that arelisted on an approved stock exchange or over which the listed group and/or its interested person(s) haveno control).

An “interested person” means a director, chief executive officer or controlling shareholder of the listedcompany or an associate of such director, chief executive officer or controlling shareholder.

An “associate” includes an immediate family member (that is, the spouse, child, adopted child, stepchild,sibling or parent) of such director, chief executive officer or controlling shareholder, and any company inwhich such director, chief executive officer or controlling shareholder and his immediate family has anaggregate interest (directly or indirectly) of 30% or more, and, where a controlling shareholder is acorporation, its subsidiary or holding company or fellow subsidiary or a company in which it and/or theyhave (directly or indirectly) an interest of 30% or more.

An “associated company” means a company in which at least 20% but not more than 50% of its sharesare held by the listed company or the group.

A “controlling shareholder” means a person who holds (directly or indirectly) 15% or more of the votingshares in the listed company or one who in fact exercises control over the listed company.

A “transaction” includes (a) the provision or receipt of financial assistance, (b) the acquisition, disposal orleasing of assets, (c) the provision or receipt of services, (d) the issuance or subscription of securities, (e)the granting of or being granted options, and (f) the establishment of joint ventures or joint investments,whether or not in the ordinary course of business, and whether or not entered into directly or indirectly(for example, through one or more interposed entities).

GENERAL REQUIREMENTS

Except for certain transactions which, by reason of the nature of such transactions, are not considered toput the listed company at risk to its interested person and are hence excluded from the ambit of Chapter9, immediate announcement, or immediate announcement and shareholders’ approval would be requiredin respect of transactions with interested persons if certain financial thresholds (which are based on thevalue of the transaction as compared with the listed company’s latest audited consolidated net tangibleassets), are reached or exceeded. In particular, shareholders’ approval is required where:

(a) the value of such transaction when aggregated with the values of all other transactions previouslyentered into with the same interested person in the same financial year of the listed company isequal to or exceeds 5% of the latest audited consolidated net tangible assets of the listedcompany; or

(b) the value of such transaction is equal to or exceeds 5% of the latest audited consolidated nettangible assets of the listed company.

APPENDIX I

17

GENERAL MANDATE

A listed company may seek a general mandate from its shareholders for recurrent transactions withinterested persons of a revenue or trading nature or those necessary for its day-to-day operations suchas the purchase and sale of supplies and materials, but not in respect of the purchase or sale of assets,undertakings or businesses. A general mandate is subject to annual renewal.

APPENDIX I

18

LETTER FROM HL BANK TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE PROPOSED IPT MANDATE

4 November 2010

The Independent Directors Kencana Agri Limited3 Shenton Way #10-06 Shenton HouseSingapore 068805

Dear Sirs


For the purpose of this letter, capitalised terms not otherwise defined shall have the meaninggiven to them in the Circular dated 4 November 2010 to the Shareholders of Kencana AgriLimited.

1. INTRODUCTION

This letter has been prepared for inclusion in the Circular dated 4 November 2010 (the “Circular”)to be issued in relation to the proposed IPT Mandate for the Interested Person Transactions byKencana Agri Limited (the “Company”).

Upon the completion of the Transaction on 2 September 2010, Newbloom, who is a wholly-ownedsubsidiary of Wilmar, has become a substantial shareholder of the Company holding 20% of theissued share capital.

Accordingly, the Wilmar Group is deemed to be an “associate” of Newbloom under the ListingManual and considered as an “Interested Person” of the Group as provided in the Listing Manualfor the purpose of the proposed IPT Mandate (as defined below).

The Group has an extensive trading relationship with the Wilmar Group, and intends to continueentering into trading transactions in the ordinary course of business with the Wilmar Groupfollowing the completion of the Transaction, including but not limited to the transactions set out inSection 2 of the Circular. These transactions will occur frequently in the ordinary course of theGroup’s business and could arise at any time and from time to time. To facilitate such transactions,the Company proposes to obtain the approval of the Shareholders at the EGM to adopt theproposed IPT Mandate, which will authorise the Group to enter into the Interest PersonTransactions.

This letter will form an integral part of the Circular. Unless otherwise defined or the contextotherwise requires, all terms defined in the Circular shall have the same meaning herein.

2. TERMS OF REFERENCE

HLB has, in accordance with Chapter 9 of the Listing Manual, been appointed as the IndependentFinancial Advisor to the Directors who are considered to be independent for the purposes of theproposed IPT Mandate (the “Independent Directors”).

This letter sets out HLB’s opinion on whether the review procedures for determining the transactionterms of the Interested Person Transactions will be carried out on normal commercial terms andwill not be prejudicial to the interests of the Company and its minority Shareholders.

APPENDIX II

19

HLB is neither a party to the negotiations in relation to the Interested Person Transactions nor werewe involved in the deliberations leading up to the decision of the Directors to consider entering intothe Interested Person Transactions or to seek approval for the proposed IPT Mandate. We do not,by this letter, warrant the merits of the Interested Person Transactions and/or the proposed IPTMandate other than to form an opinion, for the purposes of Chapter 9, on whether the reviewprocedures set up by the Company to determine the transaction terms pursuant to the InterestedPerson Transactions are adequate to ensure that the Interested Person Transactions will be carriedout on normal commercial terms and will not be prejudicial to the interests of the Company and itsminority Shareholders. We have not conducted a comprehensive review of the business, operationsor financial condition of the Company and/or its subsidiaries and/or the Interested Persons.

For the purpose of arriving at our opinion in respect of the proposed IPT Mandate, we have, as theIndependent Financial Advisor to the Independent Directors, taken into account the current reviewprocedures set up by the Company for determining transaction terms for the Interested PersonTransactions but have not evaluated and have not been requested to comment on the strategic orcommercial merits or risks of the Interested Person Transactions and/or the proposed IPT Mandateor the prospects or earnings potential of the Company and/or its subsidiaries, and such evaluationshall remain the sole responsibility of the Audit Committee of the Company.

We were also not required or authorised to obtain, and we have not obtained, any quotation ortransacted prices or terms from third parties for products or services similar to those which are tobe covered by the proposed IPT Mandate, and therefore are not able to, and will not compare theInterested Person Transactions to similar transactions with third parties.

In the course of our evaluation of the proposed IPT Mandate, we have relied on, and assumedwithout independent verification, the accuracy and completeness of published information relatingto the Company and/or its subsidiaries. We have also relied on information provided andrepresentations made by the Directors, the Company’s solicitors and auditors. We have notindependently verified such information or any representation or assurance made by them, whetherwritten or verbal, and accordingly cannot and do not accept any responsibility for, the accuracy,completeness or adequacy of such information, representation or assurance. We havenevertheless made such reasonable enquiries and exercised our judgment as we deemednecessary on the reasonable use of such information and have found no reason to doubt theaccuracy or reliability of the information.

For the purpose of our opinion, we have relied on publicly available information collated by us,information set out in the Circular, and information (including representations, opinions, facts andstatements) provided to us by the Directors, management and employees of the Company. Wehave relied on the assurances of the Directors and management of the Company that they jointlyand severally accept full responsibility for the accuracy, truth, completeness and adequacy of suchinformation and they have confirmed to us that, upon making all reasonable inquiries and to thebest of their respective knowledge, information and belief, all material information in connectionwith the proposed IPT Mandate have been disclosed to us, that such information is true, complete,accurate and fair in all material respects and that there is no other information or fact, the omissionof which would cause any information disclosed to or relied upon by us or the facts of or in relationto the proposed IPT Mandate to be inaccurate, untrue, incomplete, unfair or misleading in anymaterial respect.

Our opinion, as set out in this letter, is based upon the market, economic, industry, monetary andother applicable conditions subsisting on, and the information made available to us, as of theLatest Practicable Date. Such conditions may change significantly over a relatively short period oftime. We assume no responsibility to update, revise or reaffirm our opinion in light of anysubsequent development after the Latest Practicable Date that may affect our opinion containedherein. Shareholders should take note of any announcements relevant to the Interested PersonTransactions and/or the proposed IPT Mandate, which may be released by the Company after theLatest Practicable Date.

APPENDIX II

20

In arriving at our opinion, we have not had regard to the specific investment objectives, financialsituation, tax position, risk profile or unique needs and constraints of any individual Shareholder. Aseach Shareholder would have different investment objectives and profiles, we would advise theIndependent Directors to recommend that any individual Shareholder who may require specificadvice in relation to his or her investment objectives or portfolio should consult his or herstockbroker, bank manager, solicitor, accountant or other professional advisor immediately.

The Company has been separately advised by its advisors in the preparation of the Circular (otherthan our letter set out in this Circular). We have no role or involvement and have not provided anyadvice, financial or otherwise, whatsoever in the preparation, review and verification of the Circular(other than our letter set out in this Circular). Accordingly, we take no responsibility for and expressno views, express or implied, on the contents of the Circular (other than our letter set out in thisCircular).

Our opinion in respect of the proposed IPT Mandate should be considered in the context of theentirety of this letter and the Circular. The recommendation made by the Independent Directors tothe minority Shareholders in relation to the proposed IPT Mandate shall remain the soleresponsibility of the Independent Directors.

3. THE PROPOSED IPT MANDATE

3.1 Overview of Listing Manual Requirements for Interested Person Transactions

Chapter 9 applies to transactions between a party that is an entity at risk and a counter party thatis an interested person. The objective of Chapter 9 (as stated in Rule 901 of the Listing Manual) isto guard against the risk that interested persons could influence a listed company, its subsidiariesor associated companies to enter into transactions with interested persons that may adverselyaffect the interests of the listed company or its shareholders. The aforementioned terms “entity atrisk”, “interested person” and “associated companies” as well as other terms used in Chapter 9 aredefined below.

(a) An “entity at risk” means:

(i) the listed company;

(ii) a subsidiary of the listed company that is not listed on the SGX-ST or an approvedexchange; or

(iii) an associated company of the listed company that is not listed on the SGX-ST or anapproved exchange, provided that the listed company and/or its subsidiaries (the“listed group”), or the listed group and its interested person(s), has or have controlover the associated company.

(b) An “associated company” of a listed company means a company in which at least 20% butnot more than 50% of its shares are held by the listed company or the listed group.

(c) An “approved exchange” means a stock exchange that has rules which safeguard theinterests of shareholders against interested person transactions according to similarprinciples to Chapter 9.

(d) An “interested person” means a director, chief executive officer or controlling shareholder ofthe listed company or an associate of such director, chief executive officer or controllingshareholder.

APPENDIX II

21

(e) An “associate” in relation to an interested person who is a director, chief executive officer orcontrolling shareholder of the listed company (being an individual) means an immediatefamily member (that is, the spouse, child, adopted child, step-child, sibling or parent) of suchdirector, chief executive officer or controlling shareholder; the trustees of any trust of whichthe director and/or his immediate family, or the chief executive officer and/or his immediatefamily or the controlling shareholder and/or his immediate family is a beneficiary or, in thecase of a discretionary trust, is a discretionary object; and any company in which the directorand/or his immediate family, or the chief executive officer and/or his immediate family or thecontrolling shareholder and/or his immediate family has or have an aggregate interest(directly or indirectly) of 30% or more; and, where a controlling shareholder of the listedcompany is a corporation, its “associate” means its subsidiary or holding company or fellowsubsidiary or a company in which it and/or such other companies taken together have(directly or indirectly) an interest of 30% or more.

(f) A “chief executive officer” of a listed company means the most senior executive officer who isresponsible under the immediate authority of the board of directors for the conduct of thebusiness of the listed company.

(g) A “controlling shareholder” of a listed company means a person who holds directly orindirectly 15% or more of the voting rights in the listed company; or a person who in factexercises control over the listed company.

(h) An “interested person transaction” means a transaction between an entity at risk and aninterested person.

Materiality Thresholds, Disclosure Requirements And Shareholders’ Approval

Except for certain transactions which, by reason of the nature of such transactions, are notconsidered to put the listed company at risk to its interested persons and are hence excluded fromthe ambit of Chapter 9, immediate announcement and shareholders’ approval would be required inrespect of transactions with interested persons if certain financial thresholds (which are based onthe value of the transaction as compared with the listed company’s latest audited consolidatedNTA) are reached or exceeded.

Immediate Announcement

An immediate announcement is required where the interested person transaction is of a valueequal to, or more than, 3% of the listed group’s latest audited NTA. Where the aggregate value ofall the transactions entered into with the same interested person during the same financial yearamounts to 3% or more of the listed group’s latest audited NTA, the issuer must make anannouncement of the latest transaction and all future transactions entered into with the sameinterested person during that financial year.

Shareholders’ Approval

Shareholders’ approval is required where the interested person transaction is of a value equal to,ormore than:

(a) 5% of the listed group’s latest audited NTA; or

(b) 5% of the listed group’s latest audited NTA, when aggregated with other transactions enteredinto with the same interested person during the same financial year.

However, a transaction which has been approved by shareholders, or is the subject of aggregationwith another transaction that has been approved by shareholders, need not be included in anysubsequent aggregation.

The above requirements for immediate announcement and for shareholders’ approval do not applyto any transaction below S$100,000.

APPENDIX II

22

Chapter 9 permits a listed company to seek a general mandate from its shareholders for recurrenttransactions with interested persons of a revenue or trading nature or those necessary for its dayto-day operations, but not in respect of the purchase or sale of assets, undertakings or businesses.

3.2 Evaluation of the review procedures for the proposed adoption of the proposed IPT Mandate

In evaluating and arriving at our opinion on whether the review procedures for the InterestedPerson Transactions for purposes of the adoption of the proposed IPT Mandate, as set out insection 2 of the Circular, are sufficient to ensure that the Interested Person Transactions will becarried out at arm’s length, on normal commercial terms and will not be prejudicial to the interestsof the Company and its minority Shareholders, we have taken into consideration the following:

(a) the scope of the proposed IPT Mandate as set out in sections 2.1 of the Circular;

(b) the Interested Persons involved in the proposed IPT Mandate as set out in section 2.2 of theCircular;

(c) the rationale for the proposed IPT Mandate as set out in section 2.3 of the Circular;

(d) the benefit to shareholders for the proposed IPT Mandate as set out in section 2.4 of theCircular;

(e) the review procedures for the Interested Person Transactions contemplated under theproposed IPT Mandate as set out in section 2.5 of the Circular; and

(f) the general administrative procedures for the Interested Person Transactions contemplatedunder the proposed IPT Mandate as set out in sections 2.6 and 2.7 of the Circular.

3.3 Validity Period of the Proposed IPT Mandate

The Independent Directors should note that, if approved by the minority Shareholders at the EGM,the proposed IPT Mandate will take effect from the passing of the resolution in relation to theproposed IPT Mandate at the EGM, and will (unless revoked or varied by the Company in ageneral meeting) continue in force until the next annual general meeting of the Company. Approvalfrom Shareholders will be sought for the renewal of the proposed IPT Mandate at the next annualgeneral meeting and at each subsequent annual general meeting of the Company, subject tosatisfactory review by the Audit Committee of its continued application to transactions withinterested persons.

The Company will seek a fresh mandate from the Shareholders based on new review procedures ifthe review procedures in the Circular are no longer appropriate or adequate to ensure that theInterested Person Transactions will be transacted on normal commercial terms and are notprejudicial to the Company and its minority Shareholders.

3.4 Disclosure of the Aggregate Value of Transactions

We understand that the Company will announce the aggregate value of transactions conductedpursuant to the proposed IPT Mandate for the relevant financial periods which the Company isrequired to report on pursuant to Rule 705 of the Listing Manual and within the time required forthe announcement of such reports.

Disclosure will also be made in the Company’s annual report of the aggregate value oftransactions conducted pursuant to the proposed IPT Mandate during the financial year, and in theannual reports for subsequent financial years that the proposed IPT Mandate continues in force, inaccordance with the requirements of Chapter 9.

APPENDIX II

23

The name of interested persons and the corresponding aggregate value of the Interested PersonTransactions will be presented in the following format:

Name of interested person

3.5 Scope of the Proposed IPT Mandate

The Independent Directors should note that any transaction between any company within theCompany and classes of interested persons which does not fall within the ambit of the proposedIPT Mandate shall be subject to the relevant provisions of Chapter 9 and/or other applicableprovisions of the Listing Manual.

The proposed IPT Mandate will not cover any Interested Person Transactions which have a valuebelow S$100,000 as the threshold and aggregation requirements under Chapter 9 do not apply tosuch transactions.

4. OPINION

In arriving at our opinion in respect of the proposed IPT Mandate, we have considered, inter alia,the review procedures set up by the Company, the role of the Audit Committee in enforcing theproposed IPT Mandate and the rationale for and benefits of the proposed IPT Mandate.

Having regard to the considerations set out in this letter and the information available to us as atthe Latest Practicable Date, we are of the opinion that the review procedures set up by theCompany for determining transaction terms of the Interested Person Transactions are sufficient toensure that the Interested Person Transactions will be carried out on normal commercial terms andwill not be prejudicial to the interests of the Company and its minority Shareholders.

This letter is addressed to the Independent Directors for their benefit and for the purpose of theirconsideration of the proposed IPT Mandate. The recommendation made by them to the minorityShareholders in relation to the proposed IPT Mandate shall remain the sole responsibility of theIndependent Directors.

Whilst a copy of this letter may be reproduced in the Circular, neither the Company nor theDirectors may reproduce, disseminate or quote this letter (or any part thereof) for the purpose ofany matter which does not relate to the proposed IPT Mandate at any time and in any mannerwithout the prior written consent of HLB in each specific case. This letter is governed by, andconstrued in accordance with, the laws of Singapore, and is strictly limited to the matters statedherein and does not apply by implication to any other matter. Nothing herein shall confer or bedeemed or is intended to confer any right of benefit to any third party and the Contracts (Rights ofThird Parties) Act 2001, Chapter 53B of Singapore and any amendments thereto shall not apply.

Yours faithfullyFor and on behalf ofHLB

Chan Heng Toong Tong Din EuHead, Investment Banking Head, Corporate Finance

APPENDIX II

24

Aggregate value of all interestedperson transactions during thefinancial year under review(excluding transactions lessthan $100,000 and transactionsconducted under shareholders’mandate pursuant to Rule 920of the Listing Manual)

Aggregate value of all interestedperson transactions conductedunder shareholders’ mandatepursuant to Rule 920 of theListing Manual (excludingtransactions less than$100,000)

KENCANA AGRI LIMITED(Incorporated in Republic of Singapore)

(Registration No.: 200717793E)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Kencana Agri Limited will be heldat Suntec Singapore International Convention & Exhibition Centre Meeting Room 313 1 RafflesBoulevard Suntec City Singapore 039593 on 22 November 2010 at 2.30 p.m., for the purpose ofconsidering and, if thought fit, passing the following resolution, with or without any amendment:

RESOLUTION

AS AN ORDINARY RESOLUTION

PROPOSED ADOPTION OF A SHAREHOLDERS’ MANDATE FOR INTERESTED PERSONTRANSACTIONS

THAT:-

(1) approval be and is hereby given for the Company, its subsidiaries and associated companies orany of them to enter into any of the transactions falling within the categories of interested persontransactions set out in Section 2.1.2 of the Circular, with any party who is of the class or classes ofinterested persons described in Section 2.2 of the Circular, provided that such transactions aremade on normal commercial terms in accordance with the review procedures for interested persontransactions as set out in Section 2.5 of the Circular (the “IPT Mandate”);

(2) the IPT Mandate shall, unless revoked or varied by the Company in general meeting, continue tobe in force until the conclusion of the next Annual General Meeting of the Company;

(3) the Audit Committee of the Company be and is hereby authorised to take such action as it deemsproper in respect of procedures and/or to modify or implement such procedures as may benecessary to take into consideration any amendment to Chapter 9 of the Listing Manual which maybe prescribed by Singapore Exchange Securities Trading Limited from time to time; and

(4) the Directors of the Company and each of them be and are hereby authorised and empowered tocomplete and to do all such acts and things, and to approve, modify, ratify and execute suchdocuments, acts and things as they, he or she may consider necessary, desirable or expedient togive effect to the abovementioned resolutions.

By Order of the BoardKENCANA AGRI LIMITED

Seah Kim SweeCompany Secretary

4 November 2010


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Notes:

1. A member entitled to attend and vote at this EGM is entitled to appoint a proxy or proxies to attend and vote in his/her/itsstead. A proxy need not be a member of the Company.

2. The form of proxy in the case of an individual shall be signed by the appointor or his/her/its attorney, and in the case of acorporation, either under its common seal or under the hand of an officer or attorney duly authorised.

3. If the form of proxy is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she/itthinks fit.

4. If no name is inserted in the space for the name of your proxy on the form of proxy, the Chairman of the EGM will act as yourproxy.

5. The form of proxy or other instruments of appointment shall not be treated as valid unless deposited at the registered officeof the Company at 3 Shenton Way #10-06 Shenton House Singapore 068805 not less than 48 hours before the timeappointed for holding the EGM and at any adjournment thereof.


26

KENCANA AGRI LIMITED(Incorporated in Republic of Singapore)(Registration No.: 200717793E)

PROXY FORM

I/We (Name)

of (Address)

being a shareholder/member of KENCANA AGRI LIMITED (the “Company”) hereby appoint:-

NRIC/ Proportion of Name Address Passport No. Shareholding (%)

and/or (delete as appropriate)

Name Address NRIC/ Proportion of Passport No. Shareholding (%)

or failing whom the Chairman of the Extraordinary General Meeting as *my/our proxy/proxies to vote for*me/us on *my/our behalf and, if necessary, to demand a poll at the Extraordinary General Meeting of theCompany to be convened on 22 November 2010 at 2.30 p.m. at Suntec Singapore InternationalConvention & Exhibition Centre Meeting Room 313 1 Raffles Boulevard Suntec City Singapore 039593and at any adjournment thereof. *I/We direct *my/our proxy/proxies to vote for or against the OrdinaryResolution to be proposed at the Extraordinary General Meeting as indicated hereunder. If no specificdirection as to voting is given, the *proxy/proxies will vote or abstain from voting at *his/her/its discretion,as *he/she/it will on any other matter arising at the Extraordinary General Meeting.

No. of votes for(1) No. of votes against(1)

Ordinary Resolution

The Proposed Adoption of a Shareholders’Mandate for Interested Person Transactions

Note:

(1) If you wish to exercise all your votes “For” or “Against”, please indicate with a tick within the box provided. Alternatively,please indicate the number of votes as appropriate.

Dated this day of 2010.

Signature(s) of Member(s)/Common Seal

*Delete accordingly

IMPORTANT: PLEASE READ NOTES OVERLEAF BEFORE COMPLETING THIS PROXY FORM

IMPORTANT:

1. For investors who have used their CPF monies to buyshares in Kencana Agri Limited, this Circular isforwarded to them at the request of their CPFApproved Nominees and is sent solely FORINFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF Investorsand shall by ineffective for all intents and purposes ifused or purported to be used by them.

Total Number of Shares held in:

CDP Register

Register of Members

�

Notes:

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one (1) or two (2) proxies to attendand vote in his/her/its stead.

2. Where a member appoints more than one (1) proxy, he/she/it should specify the proportion of his/her/its shareholding(expressed as a percentage of the whole) to be represented by each proxy and if no percentage is specified, the first namedproxy shall be treated as representing 100% of the shareholding and the second named proxy shall be deemed to be analternate to the first named.

3. A proxy need not be a member of the Company.

4. Please insert the total number of Shares held by you. If you have Shares entered against your name in the DepositoryRegister (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), you should insert that number of Shares.If you have Shares registered in your name in the Register of Members of the Company, you should insert that number ofShares. If you have Shares entered against your name in the Depository Register and registered in your name in theRegister of Members, you should insert the aggregate number of Shares. If no number is inserted, this form of proxy will bedeemed to relate to all the Shares held by you.

5. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 3 Shenton Way#10-06 Shenton House Singapore 068805 less than 48 hours before the time set for the Extraordinary General Meeting.

6. Where an instrument appointing a proxy or proxies is signed on behalf of the appointor by an attorney, the letter or power ofattorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument ofproxy, failing which the instrument may be treated as invalid.

7. A corporation which is a shareholder of the Company may, in accordance with Section 179 of the Companies Act, Cap. 50 ofSingapore, authorise by resolution of its directors or other governing body such person as it thinks fit to act as itsrepresentative at the Extraordinary General Meeting.

8. The Company shall be entitled to reject the instrument appointing a proxy or proxies, if it is incomplete, improperly completed,illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified onthe instrument appointing a proxy or proxies. In addition, in the case of shares entered in the Depository Register, theCompany may reject any instrument appointing a proxy or proxies if a shareholder of the Company, being the appointor, isnot shown to have shares entered against his/her/its name in the Depository Register as at 48 hours before the timeappointed for holding the Extraordinary General Meeting, as certified by The Central Depository (Pte) Limited to theCompany.

Documents

KENCANA AGRI LIMITED - listed companykencana.listedcompany.com/newsroom/20101104_074618... · 04/11/2010 · the Company held by its wholly-owned subsidiary, Newbloom, and is thus