CHANGTIAN PLASTIC & CHEMICAL LIMITED 
By
The board of directors (the "Board") of Changtian Plastic & Chemical Limited (the "Company"
and, together with its subsidiaries, the "Group") refers to the circular of the Company dated 30
March 2012 (the "Circular") in relation to, inter alia, the diversification of the Group's core business to include the business relating to the manufacture and sale of Nylon-6 chips in the PRC (the "New Business").
The Board wishes to announce that the Company intends to increase its investment in the New Business, details of which are set out in the ensuing paragraphs. All capitalised terms used and not defined herein shall have the same meanings ascribed to them in the Circular.
As described in paragraph 2.3 of the Circular, the Group has plans to construct the Nylon-6 Chip Plant with an annual production capacity of approximately 55,000 mt) and the total capital commitment for the Nylon-6 Chip Development was initially estimated to be up to RMB622 million (equivalent to approximately S$124.6 million) prior to commencement of commercial operation.
The Group has since embarked on the Nylon-6 Chip Development. As at the date of this announcement, the progress of the Nylon-6 Chip Development is as follows:
(a) The Group has paid RMB6 million (equivalent to approximately S$1.17 million) for the acquisition of land premises of approximately 100 MU in Fujian Province, PRC in August
2012, for which approximately RMB14 million (equivalent to approximately S$2.73 million)
remains outstanding; and
(b) The Group has incurred capital expenditure of approximately RMB10 million (equivalent to approximately S$1.95 million) in the Nylon-6 Chip Development, which was funded through internal resources.
Based on further detailed assessment and feasibility study conducted by management of the Company, the Company is likely to increase the total capital commitment for the Nylon-6 Chip Development from up to RMB622 million (as stated in the Circular) to up to RMB1,122 million (equivalent to approximately S$224.8 million), so as to double the annual production capacity of the Nylon-6 Chip Plant from approximately 55,000 mt, as originally planned, to approximately
110,000 mt.
The Company believes that with the increased production capacity, the Group will be able to reap economies of scale, such as the lowering of its cost of production through mass manufacturing, more efficient use of marketing and managerial resources, greater bargaining power in bulk procurement and other such cost advantages in the chemical fibre industry. Further, the
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Company believes that a large scale of operations will allow it to weather periods of cost pressures and competition better than the smaller players.
The additional investment amount of up to RMB500 million will be used for the purposes of expanding the production plant and purchase of additional equipment and machinery for the production of Nylon-6 chips and construction of the related building facilities and infrastructure, which will increase the annual production capacity to approximately 110,000 mt from approximately 55,000 mt as originally planned.
As stated in the Circular, the Company intends to initially fund the capital commitments for the Nylon-6 Chip Development through internal resources and the original investment amount of RMB622 million accounted for approximately 70% of the Group's bank deposits. The Company intends to fund the additional investment amount of up to RMB500 million, including the related working capital required for the overall production of Nylon-6 chips through credit facilities from the principal bankers of the Group, including Industrial and Commercial Bank of China with which the Group has a good relationship.
The proposed additional investment is not expected to have a material impact on the Group's
NTA per Share and EPS for FY2012.
None of the directors and, to the best of the directors' knowledge, the controlling shareholders of the Company has any interest, direct or indirect, in the proposed additional investment.
5. FURTHER ANNOUNCEMENTSWe will make the necessary announcement(s) relating to the proposed additional investment as and when appropriate.
As there is no assurance that the proposed additional investment will be proceeded with, shareholders and investors are advised to exercise caution in dealing with their shares and refrain from taking any action which may be prejudicial to their interests before seeking advice from their stockbrokers, bank managers, solicitors, accountants or other professional advisers (as appropriate).
BY ORDER OF THE BOARD
YANG QINGJIN EXECUTIVE CHAIRMAN
15 January 2013
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