Placement Of Up To 18, 000, 000 New Ordinary Shares Of Par Value S$0.20 Each In The Capital Of HG Metal Manufacturing Ltd

The Directors of HG Metal Manufacturing Limited ("HG" or the "Company") wish to announce that HG has entered into a placement agreement dated 19 April 2004 (the "Placement Agreement") with Kim Eng Securities Pte. Ltd. ("KES"). Subject to and upon the terms of the Placement Agreement, KES has been appointed as Placement Agent. KES has agreed to procure subscribers and payment on a best efforts basis for up to 18,000,000 new ordinary shares of S$0.20 each (the "Placement Shares") in the capital of the Company at the price of S$0.3633 for each Placement Share (the "Placement"). The Placement Shares when issued and fully paid will rank pari passu in all respects with the existing ordinary shares of the Company.

The estimated net proceeds from the Placement will amount to approximately S$6.30 million, after deducting estimated expenses of S$0.20 million. The total net proceeds will be used for the purposes of funding the developments and expansion of the Group's business activities and to increase its working capital.

The Placement is conditional upon, inter-alia, the approval of the Singapore Exchange Securities Trading Limited ("SGX-ST") for the listing and quotation of the Placement Shares on the Official List of the SGX-ST Dealing and Automated Quotation System ("SGX Sesdaq"). The Placement Shares represent approximately 15.77% per cent. of the present issued share capital of the Company. The subscription price of S$0.3633 for each Placement Share represents a discount of approximately ten per cent. from the volume weighted average of trades done on HG's shares on the SGX Sesdaq from 9.00 a.m. up to 5.00 p.m. on 16 April 2004 and from 9.00 a.m. up to 9.20 a.m. on 19 April 2004 of S$0.4036.

At the Annual General Meeting of the Company held on 27 February 2004, approval was obtained from the shareholders of the Company to authorise the Directors pursuant to Section 161 of the Companies Act, Cap. 50 and the Listing Manual of the SGX-ST, to allot and issue shares in the capital of the Company at any time to such person and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of ordinary shares to be issued pursuant to the resolution shall not exceed 50 per cent of the issued share capital of the Company, of which the aggregate number of ordinary shares to be issued other than on a pro-rata basis to existing shareholders of the Company does not exceed 20 per cent of the issued share capital of the Company, and for the purpose of the resolution, the issued share capital be the Company's issued share capital at the time the resolution is passed (after adjusting for any subsequent consolidation or subdivision of the Company's shares), and unless revoked or varied by the Company in general meeting, such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.

When completed, the Placement will increase the existing issued and paid-up ordinary share capital of the Company by approximately 15.77 per cent. from S$22,832,499 comprising 114,162,595 ordinary shares of S$0.20 each to S$26,432,499 comprising 132,162,595 ordinary shares of S$0.20 each. The Group net tangible assets per share as at 31 October 2003, based on the audited financial statements of the Company, was 27.39 cents. After adjusting for the issue of the Placement Shares, the Group net tangible assets per share, as at 31 October 2003, would be 28.65 cents.

The Offer Information Statement dated 19 April 2004 issued pursuant to Section 277 of Subdivision (4) of Division 1 of Part XIII of the Securities and Futures Act (Chapter 289), and in accordance with the Eleventh Schedule of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2002, has been filed with the Monetary Authority of Singapore.

None of the Placement Shares will be placed by the Company with any person or groups of persons disallowed by the SGX-ST as set out under Rule 812 of the SGX-ST New Listing Manual.

None of the Directors or substantial shareholders of HG has any interest, direct or indirect, in the Placement (other than through their shareholdings in the Company).

On behalf of the Board,
Wee Piew