SembCorp Industries Signs Option to Sell Delifrance

Singapore, Sep 22, 1999

SembCorp Industries has entered into a put and call agreement for its entire holding of 137,488,052 ordinary shares (representing 76.1 per cent of the issued capital) in Delifrance Asia with Cafe Holdings.

The option price is $1.15 per share. The transaction is expected to be completed before the end of 1999.

Cafe Holdings is a special-purpose company incorporated in the British Virgin Islands, formed by Prudential Asset Management Asia (PAMA) in its capacity as general partner of certain funds managed by PAMA for the investment in Delifrance.

The agreement was signed on September 22, 1999 between Mr Tay Siew Choon, SembCorp Industries’ Managing Director and Deputy CEO and Mr Tan Yong Nang, Deputy Managing Director of PAMA and a Director of Cafe Holdings.

Mr Tay, who led SembCorp Industries' negotiating team remarked: "With the sale of Delifrance, most of the major divestments we promised our shareholders following our merger last year have been completed. It has been a long ten months working on this one but I am happy we found a suitable investor for Delifrance".

Continuing, he added: "Upon completion of the sale, management control of the company passes to Cafe Holdings and Delifrance will cease to be a subsidiary of SembCorp Industries. Cafe Holdings will absorb the roughly 1,000 management and staff of Delifrance."

Mr Wong Kok Siew, President & CEO of SembCorp Industries said: "Our divestment programme is now substantially completed and we will concentrate our energies on growing our core businesses of infrastructure, marine engineering and information technology."

Financial Effects

The sale of SembCorp Industries' 76.1 per cent stake in Delifrance will result in proceeds of $158.1 million. The Group's net tangible assets per share will increase by about 7 cents to 66.8 cents (compared to 59.8 cents announced in SembCorp Industries' 1999 interim results).

At the time of the acquisition of Delifrance, goodwill was written off against revenue reserves. In compliance with accounting practice, goodwill will be written back to the original purchase price upon divestment. This will therefore result in an extraordinary loss of about $90 million to be taken in 1999.

There is no significant change to the Group's earnings per share as the loss of share of Delifrance's profits will be offset by interest savings through the retirement of borrowings via the proceeds of the sale.

- END -

Released on September 22, 1999

For more information please call:
Phyllis Lui
Group Corporate Relations
SembCorp Industries
Tel: 731 1727
Fax: 738 4904

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