Celestial Nutrifood bond issue and Raffles Education share placement

CELESTIAL NUTRIFOODS LIMITED said that, as at 23 May 2009, the Company received notification from the holders of its Bonds, requiring the Company to redeem the Bonds held by them amounting to S$234,600,000 (instead of S$234,800,000). The total amount payable on 12 June 2009 in respect of the redemption of the S$234,600,000 Bonds is S$273,660,900. The Company shall not be in a position to meet its payment obligations as stated above to the holders of the Bonds on 12 June 2009. The Board has appointed Merrill Lynch Far East Limited and its affiliates as its sole dealer manager to assist the Company in reviewing strategic options to restructure and/or repurchase the Bonds, including negotiating with the Bondholders.

RAFFLES EDUCATION CORPORATION LIMITED announced 160,000,000 shares placement to raise S$101.2 million at the Issue Price of S$0.64 per Placement Share. The Net Proceeds will be allocated as follows: (i) approximately S$41.2 million (or 40.7% of the Net Proceeds) will be utilised to retire or pay down certain bank loans; (ii) approximately S$60.0 million (or 59.3% of the Net Proceeds) will be utilised to repay part of the outstanding purchase consideration for the acquisition of Oriental University City Development Co., Ltd in Langfang City, Hebei Province, the People's Republic of China; and (iii) the balance of the Net Proceeds, if any, will be used for working capital consideration purposes. Pending deployment, the Net Proceeds may be deposited with banks and/or financial institutions or invested in short term money markets and/or marketable securities, as the Directors may deem appropriate in the interests of the Group.

We view the placement positively as it eases investors' concerns over the company's cashflow and gearing. We raise our target price to S$0.71, based on 16x CY10, in line with the low end of peers, from S$0.44 (based on 30% discount to peer valuation). Maintain Neutral.

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