Common use of Proposed Private Placement Clause in Contracts

Proposed Private Placement. On 11 October 2019, the Company announced that it has triggered the condition under Paragraph 8.03A(2)(b) of the Listing Requirements (the listed issuer has an insignificant business or operations) and became an affected listed issuer. The Company is required to submit its regularisation plan to regularise its condition under Paragraph 8.03A(2)(b) of the Listing Requirements) (“Regularisation Plan”) by 10 October 2021 and the Company is in the midst of evaluating options available to formulate the Regularisation Plan. After due consideration of various methods of fund raising available for the purposes as stated in Section 5.6 of this announcement, the Company intends to undertake the Proposed Private Placement prior to the submission of its Regularisation Plan as the Board is of the opinion that the Proposed Private Placement is the most appropriate avenue of fund raising to meet its existing requirements as it: (a) enables the Company to manage its working capital requirements and ease the cash flow constraints to mitigate the impact of the Coronavirus disease (COVID-19) pandemic on its Existing Business operations during this unprecedented time; (b) enables the Company to raise funds to fund the Group’s Existing Business without incurring additional financing and interest costs as compared to funding via bank borrowings; (c) enables the Company to raise funds periodically and expeditiously on an “as needed” basis as the Proposed Private Placement will be implemented in tranches which thus preventing an immediate dilution to the existing shareholders’ shareholdings in the Company; and (d) strengthens the capital base of the Company and enhances greater participation from a broader range of investors in the Company’s Shares in view of the increase in the number of Anzo Shares as well as improves the Group’s future earnings when the economic and financial benefits from the use of proceeds are realised. Generally, the Group has been financing its operations through internally generated funds with minimum borrowings. The Group intends to keep its gearing level low to ensure that its operations are cost effective and profitable.

Proposed Private Placement. On 11 October 2019The Proposed Private Placement:- (i) enables the Group to raise funds, on an interim basis pending the Company announced that it has triggered the condition under Paragraph 8.03A(2)(b) completion of the Listing Requirements (Proposed Rights Issue, for its working capital requirements given the listed issuer has an insignificant business or operations) and became an affected listed issuer. The Company is required to submit its regularisation plan to regularise its condition under Paragraph 8.03A(2)(b) relatively shorter implementation timeframe of the Listing Requirements) (“Regularisation Plan”) by 10 October 2021 and the Company is in the midst of evaluating options available to formulate the Regularisation Plan. After due consideration of various methods of fund raising available for the purposes as stated in Section 5.6 of this announcement, the Company intends to undertake the Proposed Private Placement prior vis-a-vis the Proposed Rights Issue; and (ii) serves to enable the submission of its Regularisation Plan as the Board is entry of the opinion that Placement Investor, who will provide certainty on the intended proceeds to be raised from the Proposed Private Placement and thereafter, lend the necessary support through his participation in the Shareholders’ Undertakings to facilitate the implementation of the Proposed Rights Issue, particularly on a Minimum Subscription Level basis. More importantly, the Placement Investor, who is also the most appropriate avenue controlling shareholder of fund raising Lotus, is expected to meet its existing requirements as it:add value to the Group through his initiation of the business collaboration arrangement between KFM and Lotus via the BA, where Lotus has agreed to, amongst other:- (a) enables assist KFM, through supplier advances, on the Company purchase of wheat and related production material to manage enable KFM to carry out flour milling activities, which the Board expects its working capital requirements and ease the cash flow constraints wheat flour production to mitigate the impact of the Coronavirus disease (COVID-19) pandemic on its Existing Business operations during this unprecedented timebe reactivated by April 2017; (b) enables supply to KFM the Company to raise funds to fund the Group’s Existing Business without incurring additional financing tapioca starch and interest costs corn starch raw material and related production material for repacking activities and appoint KFM as compared to funding via bank borrowings;distributor of such starch products; and (c) enables house its machinery at KFM’s premises for the Company to raise funds periodically manufacturing and expeditiously packing of corn starch by KFM. For clarity, the entry into the BA will not have any effects on an “as needed” basis as the Proposed Private Placement will be implemented in tranches which thus preventing an immediate dilution to the existing KFM’s issued share capital and substantial shareholders’ shareholdings in as it does not involve any issuance of new KFM Shares. Save for earnings to be generated by the Company; and (d) strengthens the capital base of the Company and enhances greater participation from a broader range of investors in the Company’s Shares in view of the increase in the number of Anzo Shares as well as improves the Group’s future earnings when the economic and financial benefits KFM Group from the use of proceeds are realised. Generallybusiness collaboration arrangement pursuant to the BA, the Group has been financing its operations through internally generated funds with minimum borrowings. The Group intends entry into the BA is not expected to keep its gearing level low to ensure that its operations are cost effective have any other material effects on KFM’s consolidated earnings, EPS, NA and profitablegearing.