Proposed Private Placement of 8, 000, 000 New Ordinary Shares Of S$0.20 Each In The Capital Of HG Metal Manufacturing Limited (The "Private Placement")

The Directors of HG Metal Manufacturing Limited (the "Company") are pleased to announce that the Company has signed a subscription agreement on [20 May] 2003 with Lingco Marine Pte Ltd ("Lingco Marine") pursuant to which Lingco Marine has agreed to subscribe or procure subscription for 8,000,000 new ordinary shares of par value S$0.20 each in the capital of the Company (the "New Shares") at S$0.20 per New Share for an aggregate consideration of S$1,600,000. Lingco Marine is part of a group which has businesses in shipbuilding, ship operation and chartering. Our Directors are of the opinion that we will derive synergistic benefits from Lingco Marine's investment in the Company.

The Placement Price of S$0.20 for each New Share represents a premium of 14.42% of the weighted average price for trades done on 20 May 2003.

The New Shares, when issued and fully paid, will rank pari passu in all respects with the ordinary shares of the Company existing at the time of issue of the New Shares.

The Private Placement is conditional upon, inter alia, in-principle approval being granted by the Singapore Exchange Securities Trading Limited for the listing of and quotation for the New Shares on the Official List of the Singapore Exchange Securities Trading Limited Dealing and Automated Quotation System.

The estimated net proceeds of the Private Placement of approximately S$1.5million will be used as working capital for the Group.

Pending the deployment of the net proceeds, such proceeds may be placed as deposits with financial institutions or invested in short term money markets or debt instruments or for any other purposes on a short term basis as the Directors may deem fit.

When completed, the Private Placement will increase the issued share capital of the Company from S$15,466,000 divided into 77,330,000 shares of S$0.20 each to S$17,066,000 divided into 85,330,000 shares of S$0.20 each. The New Shares represent approximately 10.35% of the issued share capital of the Company as at 20 May 2003.

Based on the audited accounts of the Group as at 31 October 2002, the net tangible assets per share of the Company and the Group, after adjusting for the New Shares remain unchanged at approximately 22.93 cents and 25.02 cents respectively.

The New Shares will be issued pursuant to the general mandate obtained at the annual general meeting of the Company on 28th March 2003 which authorises the Directors of the Company pursuant to Section 161 of the Singapore Companies Act (Cap 50) to issue new shares not exceeding 20% of the Company's issued share capital for the time being in the case where shares are issued other than on a pro-rata basis to existing shareholders.

None of Lingco Marine or its related parties are Directors or substantial shareholders of the Company or any of their respective related parties. Lingco Marine's Executive Director, Mr. Sia Ling Sing, currently holds 2,100,000 shares in the Company. None of the Directors or substantial shareholders of the Company has any interest, direct or indirectly, in the Private Placement