circular to shareholders · bnp paribas peregrine (singapore) ltd (incorporated in the republic of...

CIRCULAR DATED 11 AUGUST 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bankmanager, accountant, solicitor or other professional adviser immediately.

If you have sold or transferred all your shares in the capital of GP Industries Limited (the “Company”),you should immediately forward this Circular together with the Notice of Extraordinary General Meetingand the accompanying Proxy Form to the purchaser or transferee or to the bank, stockbroker or otheragent through whom the sale or transfer was effected for onward transmission to the purchaser ortransferee.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness ofany statements made, reports contained or opinions expressed in this Circular.

(Incorporated in the Republic of Singapore)Company Registration Number 199502128C

GP Industries Limited

CIRCULAR TO SHAREHOLDERS

in relation to the

PROPOSED SCHEME OF ARRANGEMENTFOR THE PURPOSE OF PRIVATISING CIH LIMITED

UNDER SECTION 210 OF THE COMPANIES ACT,CHAPTER 50 OF SINGAPORE

Financial Adviser to the Company

BNP PARIBAS PEREGRINE (SINGAPORE) LTD(Incorporated in the Republic of Singapore)Company Registration Number 197902035K

IMPORTANT DATES AND TIMES:

Latest Date and Time for Lodgement of Proxy Form : 28 August 2006 at 4.00 p.m.

Date and Time of Extraordinary General Meeting : 30 August 2006 at 4.00 p.m.

Place of Extraordinary General Meeting : Meeting Room 309, Level 3Suntec Singapore International Convention &Exhibition Centre1 Raffles Boulevard, Suntec CitySingapore 039593

IMPORTANT NOTICE TO OVERSEAS SHAREHOLDERS

Australia

This Circular has been prepared for the purposes of the legislative requirements applicable in respectof a scheme of arrangement under Section 210 of the Companies Act, Chapter 50 of Singapore and therules of the Singapore Exchange Securities Trading Limited, and may not contain all the informationrequired to be contained in disclosure documents under Australian law. The Company is not subject tothe continuous disclosure requirements of the Corporations Act 2001.

Hong Kong

The contents of this Circular have not been reviewed by any regulatory authority in Hong Kong. You areadvised to exercise caution in relation to the Scheme. If you are in any doubt about any of the contentsof this Circular, you should obtain independent professional advice.

CONTENTS

Page

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

LETTER TO SHAREHOLDERS

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. The Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3. Information on CIHL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5. Rationale and Future Plans for CIHL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

6. Major Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

7. Issue of New GPIL Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

8. Renouncement of the CIHL Special Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

9. Interests of Directors and Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

10. Directors’ Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

11. Extraordinary General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

12. Action to be taken by GPIL Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

13. Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

14. Directors’ Responsibility Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

15. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

APPENDICES

1. Pro Forma Unaudited Consolidated Financial Statements of the Enlarged GPIL Group . 12

2. Financial Effects of the Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

PROXY FORM

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DEFINITIONS

In this Circular, the following definitions apply throughout unless the context otherwise requires:

“Act” : The Companies Act, Chapter 50 of Singapore

“Belvedire” : Belvedire Pty Ltd

“BNP Paribas” : BNP Paribas Peregrine (Singapore) Ltd

“Business Day” : A day (other than a Saturday, Sunday or public holiday) on whichcommercial banks are open for business in Singapore

“CAHL” : Clipsal Asia Holdings Limited

“CDP” : The Central Depository (Pte) Limited

“CIHL” : CIH Limited

“CIHL Books Closure Date” : A date and time to be announced (before the Effective Date) onwhich the Transfer Books and the Register of Members of CIHLwill be closed in order to determine the entitlements of CIHLScheme Shareholders to the New GPIL Shares and theentitlements of CIHL Shareholders to the CIHL Special Dividend

“CIHL Group” : CIHL, its subsidiaries and associated companies

“CIHL Optionholders” : Holders of outstanding CIHL Options

“CIHL Options” : Valid existing options granted under the CIHL Share OptionScheme

“CIHL SchemeShareholders”

: CIHL Shareholders, other than the Company

“CIHL Scheme Shares” : All of the CIHL Shares, other than those held by or on behalf ofthe Company

“CIHL Shareholders” : Persons who are registered as holders of CIHL Shares in theRegister of Members of CIHL and Depositors who have CIHLShares entered against their names in the Depository Register ofCIHL, and includes persons entitled by transmission

“CIHL Shares” : Ordinary shares in the capital of CIHL

“CIHL Share OptionScheme”

: The CIH Limited Share Option Scheme 1999

“CIHL Special Dividend” : A special cash dividend of S$0.40 for each CIHL Share proposedby CIHL on 3 February 2006 pursuant to the Scheme

“Code” : The Singapore Code on Take-overs and Mergers

“Court” : The High Court of the Republic of Singapore

“Court Meeting” : The meeting of the CIHL Scheme Shareholders to be convenedat the direction of the Court, and any adjournment thereof

“Directors” : The directors of the Company as at the date of this Circular

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“Effective Date” : The date on which the Scheme, if approved, becomes effective

“EGM” : The extraordinary general meeting of the Company to be held on30 August 2006, and any adjournment thereof

“Entitled CIHL SchemeShareholders”

: CIHL Scheme Shareholders as at the CIHL Books Closure Date

“FY” : Financial year ended 31 March

“Gold Peak” : Gold Peak Industries (Holdings) Limited

“GPIL” or the “Company” : GP Industries Limited

“GPIL Books Closure Date” : A date and time to be announced on which the Transfer Booksand the Register of Members of the Company will be closed inorder to determine the entitlements of GPIL Shareholders to theGPIL Special Dividend Amount (as defined herein)

“GPIL Group” : The Company, its subsidiaries and associated companies

“GPIL Options” : Valid existing options granted under the GPIL Share OptionScheme

“GPIL Shareholders” : Persons who are registered as holders of GPIL Shares in theRegister of Members of GPIL and Depositors who have GPILShares entered against their names in the Depository Register ofGPIL, and includes persons entitled by transmission

“GPIL Share OptionScheme”

: The GP Industries Limited Share Option Scheme 1999

“GPIL Shares” : Ordinary shares in the capital of GPIL

“Latest Practicable Date” : 7 August 2006, being the latest practicable date prior to theprinting of this Circular

“Listing Manual” : SGX-ST Listing Manual

“Market Day” : A day on which the SGX-ST is open for trading of securities

“NAV” : Net asset value

“New GPIL Shares” : New GPIL Shares to be issued pursuant to the Scheme

“NTA” : Net tangible assets

“Put Option” : An option granted to CIHL to sell its entire 50 per cent. interest inCAHL to Schneider Electric

“Put Option Exercise Price” : US$58.99 million (approximately S$96 million) calculated inaccordance with the terms of the joint venture agreement dated25 August 2003 entered into between CIHL and SchneiderElectric in relation to CAHL

“Schneider Electric” : Schneider Electric SA

“Securities Account” : A securities account maintained by a Depositor with CDP but notincluding a securities sub-account

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“SGX-ST” : Singapore Exchange Securities Trading Limited

“SIC” : Securities Industry Council of Singapore

“Substantial Shareholder” : A person who has an interest (as defined in the Act) in not lessthan 5 per cent. of the issued voting shares of the Company

“S$” : Singapore dollars, the lawful currency of Singapore

“US$” : United States dollars, the lawful currency of the United States ofAmerica

“%” or “per cent.” : Per centum or percentage

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meaningsascribed to them respectively in Section 130A of the Act.

Words importing the singular shall, where applicable, include the plural and vice versa. Words importingthe masculine gender shall, where applicable, include the feminine and neuter genders and vice versa.References to persons shall, where applicable, include corporations.

Any reference in this Circular to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Act or the Code or any statutory modificationthereof and not otherwise defined in this Circular shall have the same meaning assigned to it under theAct or the Code or any statutory modification thereof, as the case may be.

Any reference to a time of day and date in this Circular is made by reference to Singapore time and daterespectively unless otherwise stated.

Any reference to “you” or “your” in this Circular is a reference to GPIL Shareholders, as the case maybe, unless the context otherwise requires.

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GP INDUSTRIES LIMITED(Incorporated in the Republic of Singapore)Company Registration Number 199502128C

Directors: Registered Office:

Victor Lo Chung Wing (Chairman)Leung Pak Chuen (Executive Vice Chairman)Brian Li Yiu Cheung (Managing Director)Andrew Chuang Siu LeungWong Man KitLim Ah DooPhua Bah LeeLim Hock Beng

1 Temasek Avenue#18-02 Millenia TowerSingapore 039192

11 August 2006

To: The Shareholders of GP Industries Limited

Dear Sir/Madam

PROPOSED SCHEME OF ARRANGEMENT FOR THE PURPOSE OF PRIVATISING CIH LIMITEDUNDER SECTION 210 OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE

1. INTRODUCTION

1.1 Announcement of Scheme. On 3 February 2006, the Directors and the directors of CIHL jointlyannounced (the “Announcement”) a proposal to privatise CIHL by way of a scheme ofarrangement (the “Scheme”) under Section 210 of the Act, subject to, inter alia, the approval ofthe relevant regulatory authorities, the CIHL Scheme Shareholders, GPIL Shareholders, theindependent shareholders of Gold Peak and the sanction of the Scheme by the Court.

1.2 Scheme Document. On 11 August 2006, CIHL despatched a document (the “SchemeDocument”) containing full details of the Scheme, including the recommendation of the directorsof CIHL considered to be independent for the purposes of the Scheme, to the CIHLShareholders. A copy of the Scheme Document is available on the website of the SGX-ST atwww.sgx.com and is also available for inspection at the registered office of the Company.

1.3 Circular. The purpose of the Circular is to provide GPIL Shareholders with relevant informationon the Scheme and to seek GPIL Shareholders’ approval for (a) the Scheme; (b) the issue andallotment of New GPIL Shares pursuant to the Scheme; and (c) the renouncement of theCompany’s entitlement to the CIHL Special Dividend in favour of GPIL Shareholders as at theGPIL Books Closure Date.

2. THE SCHEME

2.1 Holdings of the Company. As at the Latest Practicable Date, the issued and paid-up sharecapital of CIHL consists of 129,256,327 CIHL Shares. As at the Latest Practicable Date, theCompany holds 87,730,426 CIHL Shares, representing approximately 67.9 per cent. of the CIHLShares in issue.

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2.2 Scheme. The Scheme is proposed to all CIHL Scheme Shareholders in accordance with Section210 of the Act and the Code, pursuant to which:

(a) CIHL will declare the CIHL Special Dividend in favour of all CIHL Shareholders as at theCIHL Books Closure Date. The CIHL Special Dividend is conditional on the Schemebecoming effective in accordance with its terms;

(b) the CIHL Scheme Shares held by the Entitled CIHL Scheme Shareholders will betransferred to the Company and/or its nominees; and

(c) in consideration for which the Company will allot and issue to the Entitled CIHL SchemeShareholders approximately 3.166 New GPIL Shares for each CIHL Scheme Sharetransferred, fractions of a New GPIL Share to be disregarded.

2.3 Consideration. The consideration of 3.166 New GPIL Shares for each CIHL Scheme Share wasdetermined based on the ex-special dividend NAV of each GPIL Share and CIHL Share as at 30September 2005, which was S$0.754 and S$2.387 respectively.

2.4 Illustrative Example. For illustrative purposes only, the number of New GPIL Shares to beissued to Entitled CIHL Scheme Shareholders pursuant to the Scheme shall be as follows:

Number of CIHL Shares held byEntitled CIHL Scheme Shareholder

as at the record date for the Scheme

Number of New GPIL Shares to be issued toEntitled CIHL Scheme Shareholder pursuant

to the Scheme (after rounding down)

1,000 3,166

10,000 31,660

100,000 316,600

1,000,000 3,166,000

2.5 No Encumbrances. Pursuant to the Scheme, the CIHL Scheme Shares will be transferred (a)fully paid; (b) free from all liens, equities, charges, encumbrances, rights of pre-emption and anyother third party rights or interests of any nature whatsoever; and (c) together with all rightsattached thereto as at the Effective Date and thereafter attaching thereto, but excluding the rightto receive and retain all dividends, rights and other distributions (if any) the record date of whichfalls before the Effective Date. For the avoidance of doubt, the Company will not pursuant to theScheme acquire the CIHL Scheme Shares with the right to the CIHL Special Dividend, and CIHLShareholders will continue to be entitled to the CIHL Special Dividend.

2.6 CIHL Options. As at the Latest Practicable Date, there are CIHL Options entitling CIHLOptionholders to subscribe for a total of 504,000 CIHL Shares. Under Rule 14(b) of the CIHLShare Option Scheme, if, inter alia, the Court sanctions an arrangement for the purposes ofCIHL’s amalgamation with another company, persons holding CIHL Options as yet unexercised(including CIHL Options which are not then exercisable) and not lapsed in accordance with Rule15(b) of the CIHL Share Option Scheme, shall be entitled to exercise such CIHL Options in fullor in part in the period commencing on the date upon which the arrangement is sanctioned bythe Court and ending either on the expiry of 60 days thereafter or the date the arrangementbecomes effective, whichever is later (but not after the expiry of the option period relating to eachsuch CIHL Option), whereupon, any unexercised CIHL Option shall lapse and become null andvoid. The last date for the exercise of CIHL Options by CIHL Optionholders who wish toparticipate in the Scheme is expected to be ten (10) Market Days before the CIHL Books ClosureDate (the “Final CIHL Option Exercise Date”). The last date for trading of the CIHL Sharespursuant to the Scheme is expected to be three (3) Market Days before the CIHL Books ClosureDate.

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Accordingly, all CIHL Optionholders who validly exercise their CIHL Options and are issued CIHLShares pursuant to such valid exercise before or on the Final CIHL Option Exercise Date will beentitled to participate in the Scheme. If a CIHL Optionholder purports to exercise his or her CIHLOptions after the Final CIHL Option Exercise Date, there will be insufficient time for CIHL to issueCIHL Shares to that CIHL Optionholder and notwithstanding the rules of the CIHL Share OptionScheme as mentioned above, such CIHL Optionholders will not have effectively exercised theirCIHL Options prior to the CIHL Books Closure Date and will not be able to participate in theScheme.

As the rules of the CIHL Share Option Scheme prescribe that the CIHL Options are nottransferable by the holders thereof, the Company will not make an offer to acquire any CIHLOptions which have not been validly exercised prior to or on the CIHL Final Option ExerciseDate. Instead CIHL is proposing (the “CIHL Options Proposal”) to compensate CIHLOptionholders in cash in consideration for such CIHL Optionholders agreeing not to exercise allor any of their outstanding CIHL Options into CIHL Shares or otherwise exercise all or any oftheir rights as CIHL Optionholders.

The Options Proposal is conditional upon the Scheme becoming effective on the Effective Dateand the relevant CIHL Options continuing to be exercisable into new CIHL Shares. On theScheme becoming effective on the Effective Date, CIHL Optionholders who have accepted theCIHL Options Proposal will be required to surrender all of their relevant CIHL Options forcancellation. If the Scheme is not approved in accordance with its terms or if the relevant CIHLOptions cease to be exercisable into new CIHL Shares, the CIHL Options Proposal will lapseaccordingly.

Further details on the CIHL Options Proposal are set out in the Explanatory Statement in theScheme Document.

2.7 Conditions. The Scheme is subject to the following conditions and will become effective andbinding if:

(a) the Scheme is approved by a majority in number of the CIHL Scheme Shareholders holdingat least three-fourths in value of the CIHL Scheme Shares, present and voting, either inperson or by proxy at the Court Meeting;

(b) the Scheme is sanctioned by the Court and a copy of the order of Court is lodged with theAccounting and Corporate Regulatory Authority in Singapore;

(c) the Scheme, the allotment and issue of New GPIL Shares to the Entitled CIHL SchemeShareholders, the renouncement by the Company of the CIHL Special Dividend in favourof GPIL Shareholders and all other matters necessary to effect the Scheme are approvedby GPIL Shareholders at a general meeting;

(d) the Scheme proposal is approved by the independent shareholders of Gold Peak at anextraordinary general meeting in which the Gerard family, Mr Andrew Ng Sung On, MrChau Kwok Wai, Mr Raymond Wong Wai Kan, Mr Ho Pak Nin and their respectiveassociates abstain from voting;

(e) the listing of the New GPIL Shares on the SGX-ST is approved by the SGX-ST;

(f) the CIHL Special Dividend is approved by CIHL at the Court Meeting; and

(g) consent of certain lenders to Gold Peak is obtained.

As at the Latest Practicable Date, conditions (d) and (g) have been satisfied.

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On 8 August 2006, the SGX-ST granted its in-principle approval for the listing and quotation ofthe New GPIL Shares on the SGX-ST. Such approval is not to be taken as an indication of themerits of the Scheme or the listing of the New GPIL Shares. Condition (e) has therefore alsobeen satisfied.

GPIL Shareholders should note that if any of the above conditions is not fulfilled, the Scheme willnot become effective. Subject to the fulfilment of the above conditions, it is expected that theScheme will become effective on or about 29 September 2006.

2.8 Gerard Family Undertaking. The Gerard family, through Belvedire, holds 22,325,156 CIHLShares, representing approximately 17.3 per cent. of the total number of CIHL Shares in issueas at the Latest Practicable Date. The Gerard family, through Belvedire, has given the Companyan undertaking (the “Gerard Undertaking”) to vote their entire holding of CIHL Shares in favourof the Scheme and any other matter necessary or proposed to implement the Scheme at theCourt Meeting. The Gerard Undertaking will lapse on the earliest of (a) the Effective Date; (b) thedate on which the Scheme is withdrawn or lapses or fails to become effective and binding forwhatever reason; or (c) 30 September 2006.

2.9 Regulatory Approvals.

(a) SIC. The SIC has confirmed, inter alia, that Rules 14,15,16,17, 20.1, 21, 22, 28, 29, 33.2and note 1(b) to Rule 19 of the Code do not apply to the Scheme, subject to the followingconditions:

(i) the common substantial shareholders of the Company and CIHL (i.e. those holdingfive per cent. or more interests in the Company and CIHL) abstain from voting on theScheme;

(ii) the Company and its concert parties abstain from voting on the Scheme;

(iii) the directors of CIHL who are also Directors abstain from making a recommendationon the Scheme to the CIHL Scheme Shareholders; and

(iv) CIHL appoints an independent financial adviser to advise the CIHL SchemeShareholders on the Scheme;

(b) Court. The Scheme is subject to sanction by the Court as stated under paragraph 2.7(b)above; and

(c) SGX-ST. An application had been made to the SGX-ST to withdraw the CIHL Shares fromthe Official List of SGX-ST upon the Scheme becoming effective and binding.

2.10 Effect of the Scheme and Delisting. If the Scheme becomes effective, the Company will ownall the issued shares in CIHL, and CIHL will be a wholly-owned subsidiary of the Company. Asmentioned in paragraph 2.9(c) above, an application had been made to the SGX-ST to withdrawthe CIHL Shares from the Official List of the SGX-ST upon the Scheme becoming effective andbinding. SGX-ST has advised that, inter alia, subject to the Scheme being approved by the CIHLScheme Shareholders and the Court, it has no objection to the proposed withdrawal of the CIHLShares from the Official List of the SGX-ST. The SGX-ST’s confirmation, however, is not anindication of the merits of CIHL, the Scheme or of the proposed withdrawal of the CIHL Sharesfrom the Official List of the SGX-ST.

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The shareholding structure of the Company and CIHL as at the Latest Practicable Date and afterthe Effective Date is set out below:

Shareholding structure of the Company and CIHL as at the Latest Practicable Date

87.0%

17.3%14.8% 67.9%

CIH Limited(Singapore)

GP Industries Limited(Singapore)

Gold Peak Industries (Holdings) Limited(Hong Kong)

Gerard familyOther shareholders

Shareholding structure of the Company and CIHL after the Effective Date

12.0%

100%

20.4%

67.6%

Gold Peak Industries (Holdings) Limited(Hong Kong)

GP Industries Limited(Singapore)

CIH Limited(Singapore)

Gerard familyOther shareholders

3. INFORMATION ON CIHL

3.1 CIHL. Incorporated in Singapore in 1991, CIHL was principally engaged in the development,manufacture and marketing of electrical installation products. It was one of the major suppliersof electrical installation products in Asia. In December 2003, CIHL formed a 50–50 joint venturecompany, CAHL, with Schneider Electric to manufacture and distribute electrical wiring devicesand installation systems in Asia. On 12 January 2006, CIHL served notice to Schneider Electricto dispose of its entire interest in CAHL pursuant to the exercise of the Put Option at the PutOption Exercise Price. The exercise of the Put Option was completed on 15 March 2006. CIHLis an investment holding company with investments by the CIHL Group in light fittings products,light emitting diode superscreens and other businesses. The CIHL Group currently has about280 employees.

3.2 Asset Value. As at 31 March 2006, the net tangible asset value of the CIHL Shares wasapproximately S$334 million. Based on the volume weighted average price of the CIHL Shareson the SGX-ST on the Latest Practicable Date, the market value of the CIHL Shares isapproximately S$268.9 million.

3.3 Net Loss. The net loss of the CIHL Group attributable to CIHL Shareholders for FY2006 wasapproximately S$2.4 million.

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4. FINANCIAL INFORMATION

4.1 Pro forma Unaudited Financial Statements. The pro forma unaudited consolidated balancesheets as at 31 March 2005 and 2006 of the enlarged GPIL Group, the pro forma unauditedconsolidated profit and loss statements for FY2005 and FY2006 of the enlarged GPIL Group andprincipal assumptions applied in preparing such pro forma unaudited consolidated financialstatements are set out in Appendix 1 of this Circular.

4.2 Financial Effects. The financial effects of the Scheme on the GPIL Group are set out inAppendix 2 of this Circular.

5. RATIONALE AND FUTURE PLANS FOR CIHL

5.1 Rationale. The Scheme is proposed in order to enable the Company to privatise CIHL.

CIHL became a subsidiary of the Company in April 2004. CIHL currently does not have anysignificant core business following the completion of the disposal in March 2006 of its entire 50per cent. interest in CAHL, the joint venture with Schneider Electric, pursuant to the exercise ofthe Put Option. The Scheme will fully integrate CIHL’s residual business and operations into theGPIL Group, enabling the GPIL Group and CIHL’s resources to be aggregated, thereby allowingthe Company’s management to exercise greater flexibility in utilising and deploying theresources of the enlarged GPIL Group. Streamlining the operations and organisational structuremay include the combination of certain operational functions, which should facilitate greater costsavings, greater efficiency and productivity, and consequently improve competitiveness for theenlarged GPIL Group. In addition, as an enlarged group, functions such as procurement,business development and financing needs may be more efficiently managed.

Upon CIHL becoming a wholly-owned, non-listed subsidiary, the structure of the GPIL Group willbe streamlined through the elimination of any over-lapping costs associated with multiplelistings. CIHL has not raised funds through the equity or debt capital markets over the past fiveyears and it does not anticipate that it will need to do so in the foreseeable future. The costsassociated with maintaining CIHL’s listing status should therefore be considered against thisbackground.

Through the Scheme, the CIHL Scheme Shareholders will become shareholders of theCompany. This will enable the CIHL Scheme Shareholders to have the option of remaininginvested in CIHL, but as GPIL Shareholders, thus having the opportunity to benefit from theCompany’s existing core business operations, comprising electronics, components, wireharness and cables, acoustics products and batteries (through the Company’s listed associate,GP Batteries International Limited).

The Scheme involves the issue of New GPIL Shares to CIHL Scheme Shareholders, therebyresulting in significant enlargement of the shareholder base of the Company. As at the LatestPracticable Date, the free float1 of the Company and CIHL is approximately 12.2 per cent. andapproximately 14.6 per cent. respectively. Assuming the Scheme is effected, the free float1 of theCompany will increase to approximately 19.6 per cent. (excluding the Gerard family’s stake). Inaddition, the historical trading liquidity of CIHL Shares has generally been limited. Both GPILShareholders and CIHL Scheme Shareholders could potentially benefit from the increasedtrading liquidity as a result of the enlarged free float of the Company.

1 Excludes shares held by directors of each of GPIL and CIHL.

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Through the Scheme, the CIHL Scheme Shareholders will have an opportunity to realise part oftheir investment in CIHL for cash through the CIHL Special Dividend. In addition, GPILShareholders would each receive approximately not less than S$0.07422 for every GPIL Shareheld as at the GPIL Books Closure Date.

5.2 Future Plans for CIHL. The Company has stated that it is its intention that in the near term theCIHL Group will continue with its existing activities. The Company has no near-term plans, in theevent that the Scheme becomes effective, to (a) introduce any major changes to the businessesof the CIHL Group that would be unfavourable to the business of the CIHL Group or (b) makeany major disposal or redeployment of assets of the CIHL Group except where such disposal orredeployment is necessary to rationalise the business activities of the Group and to maximiseutilisation of resources of the CIHL Group and align corporate strategies. However it is to benoted that some redundancies and changes in staff employment and redeployment of certainstaff may take place as a result of any rationalisation of the business activities and to furtherimprove the efficiency of the operations of the CIHL Group.

6. MAJOR TRANSACTION

6.1 Rule 1006. The relative figures for the acquisition of the CIHL Scheme Shares pursuant to theScheme computed on the bases set out in Rule 1006 (“Rule 1006”) of the Listing Manual as at31 March 2006 are as follows:

Rule1006

Bases

Acquisition ofthe CIHL

Scheme Shares GPIL Group %(’000) (’000)

(b) Profit before income tax, minority interests andextraordinary items (“Net Profit”) attributable to theCIHL Scheme Shares to be acquired, compared withthe GPIL Group’s Net Profit, for FY2006.

S$541(1) S$31,154 2

(c) Aggregate value of consideration given, comparedwith GPIL Group’s market capitalisation by referenceto the Market Day preceding the date of theAnnouncement.

S$100,332(2) S$337,423(3) 30

(d) Number of equity securities issued by GPIL asconsideration for the acquisition of the CIHL SchemeShares pursuant to the Scheme compared with thenumber of equity securities in issue on the MarketDay preceding the date of the Announcement.

133,067(4) 459,079 29

Notes:

(1) Net Profit attributable to the CIHL Scheme Shares is calculated as S$1,683,000, being the total profit afterexceptional items but before taxation, minority interest and extraordinary items for CIHL for FY2006, multiplied by32.13 per cent., being the minority interest in CIHL as at 31 March 2006. The total profit after exceptional items butbefore taxation, minority interest and extraordinary items for CIHL for FY2006 of S$1,683,000 is derived from thesum of the profit/(loss) after exceptional items but before taxation, minority interest and extraordinary items of thecontinuing operations and the discontinued operations of CIHL, being S$2,587,000 and S$(904,000) respectively.

(2) Aggregate value of the consideration given is calculated as 133,066,667, being the number of New GPIL Sharesto be issued assuming all outstanding CIHL Options are exercised, multiplied by S$0.754, being the ex-specialdividend NAV of each GPIL Share as at 30 September 2005 used to determine the Scheme consideration of 3.166New GPIL Shares for each CIHL Share.

(3) The GPIL Group’s market capitalisation is based upon 459,079,443 GPIL Shares in issue as at 2 February 2006,being the last Market Day prior to the Announcement, multiplied by the volume weighted average price of the GPILShares transacted on 2 February 2006.

(4) The number of New GPIL Shares to be issued by the Company assuming the Scheme becomes effective andbinding and all outstanding CIHL Options are exercised.

2 Based on the issued share capital of GPIL as at the Latest Practicable Date and the number of CIHL Shares held by GPILas at the Latest Practicable Date, and assuming all outstanding GPIL Options as at the Latest Practicable Date have beenvalidly exercised.

7

6.2 GPIL Shareholders’ Approval. As the relative figures computed under Rules 1006(c) and (d) asset out in paragraph 6.1 above exceed 20 per cent., the Scheme constitutes a major transactionfor the Company as defined in Chapter 10 of the Listing Manual. Accordingly, the Scheme issubject to the approval of GPIL Shareholders.

7. ISSUE OF NEW GPIL SHARES

7.1 New GPIL Shares. Pursuant to the Scheme, the Company will issue between:

(a) approximately 131,471,003 New GPIL Shares, representing (i) approximately 28.6 percent. of the issued share capital of the Company as of the Latest Practicable Date and (ii)approximately 22.2 per cent. of the enlarged issued share capital of the Company after theScheme (in each case, assuming (1) the Scheme becomes effective and binding; (2) nooutstanding CIHL Options are exercised; and (3) no outstanding GPIL Options areexercised); and

(b) approximately 133,066,667 New GPIL Shares, representing (i) approximately 29.0 percent. of the issued share capital of the Company as of the Latest Practicable Date and (ii)approximately 22.5 per cent. of the enlarged issued share capital of the Company after theScheme (in each case, assuming (1) the Scheme becomes effective and binding; (2) alloutstanding CIHL Options are exercised; and (3) no outstanding GPIL Options areexercised).

The New GPIL Shares will be issued credited as fully paid and will rank pari passu in all respectswith the existing GPIL Shares as of the Effective Date, except only that the New GPIL Shareswill not carry the right to any dividends or other distributions (including without limitation, interimdividends) declared, made or paid by the Company prior to the Effective Date. For theavoidance of doubt, the New GPIL Shares will be allotted and issued after the GPIL BooksClosure Date and will therefore not carry the right to the GPIL Special Dividend Amount(as defined below) renounced by the Company in favour of GPIL Shareholders.

On 8 August 2006, the SGX-ST granted its in-principle approval for the listing and quotation ofthe New GPIL Shares on the SGX-ST. Such approval is not to be taken as an indication of themerits of the Scheme or the listing of the New GPIL Shares.

7.2 Fractional Entitlements. Fractions of a New GPIL Share will not be issued to any Entitled CIHLScheme Shareholder.

7.3 GPIL Shareholders’ Approval for Issue of New GPIL Shares. At the last annual generalmeeting of the Company on 28 July 2006, the GPIL Shareholders authorised the Directors to,inter alia, issue such number of new GPIL Shares other than on a pro rata basis to GPILShareholders of up to 20 per cent. of the issued share capital of the Company for the time being(the “Share Issue Mandate”). As noted in paragraph 7.1 above, the number of New GPILShares to be issued pursuant to the Scheme would exceed the Share Issue Mandate.Accordingly, the issue of New GPIL Shares pursuant to the Scheme is required to be approvedby GPIL Shareholders under Section 161 of the Act and the approval of GPIL Shareholders issought for, inter alia, this purpose at the EGM. Such approval will be valid only for the issue ofNew GPIL Shares pursuant to the Scheme and not for the issue of any new GPIL Shares for anyother purpose. Further, the New GPIL Shares would not be issued pursuant to the Share IssueMandate and the Share Issue Mandate would not be diminished by the issue of the New GPILShares.

8

8. RENOUNCEMENT OF THE CIHL SPECIAL DIVIDEND

8.1 CIHL Special Dividend. Pursuant to the Scheme, CIHL will declare the CIHL Special Dividendin favour of all CIHL Shareholders (including the Company and its related corporations) as at theCIHL Books Closure Date. The CIHL Special Dividend is conditional upon the Scheme becomingeffective in accordance with its terms.

CIHL will fund the payment of the CIHL Special Dividend entirely from the net proceeds arisingfrom the disposal of its entire 50 per cent. interest in CAHL pursuant to the exercise of the PutOption at the Put Option Exercise Price.

8.2 GPIL Special Dividend Entitlement. As at the Latest Practicable Date, the Company holds87,730,426 CIHL Shares, representing approximately 67.9 per cent. of the total number of CIHLShares in issue. Subject to the approval of the Scheme, GPIL’s entitlement to the CIHL SpecialDividend will be approximately S$35,092,170 (the “GPIL Special Dividend Amount”), based onthe Company’s shareholding in CIHL as at the Latest Practicable Date. The Company willrenounce (the “Renouncement”) the GPIL Special Dividend Amount in favour of GPILShareholders in proportion to their holdings of GPIL Shares as at the GPIL Books Closure Date.Based on the issued share capital of the Company as at the Latest Practicable Date and thenumber of CIHL Shares held by the Company as at the Latest Practicable Date, and assumingall GPIL Options outstanding as at the Latest Practicable Date are validly exercised, GPILShareholders will receive approximately not less than S$0.0742 for each GPIL Share held as atthe GPIL Books Closure Date.

8.3 GPIL Shareholders’ Entitlements. Upon obtaining the approval of GPIL Shareholders for theScheme, the issue of the New GPIL Shares and the Renouncement at the EGM, and assumingthe Scheme is sanctioned by the Court in accordance with its terms, an announcement will bemade to notify GPIL Shareholders of the GPIL Books Closure Date for the purpose ofdetermining the entitlements of GPIL Shareholders to the GPIL Special Dividend Amount. As theCIHL Special Dividend is conditional upon the Scheme being approved, the Company expectsto receive the GPIL Special Dividend Amount not later than 10 Market Days after the EffectiveDate. Assuming the Scheme becomes effective on 29 September 2006 and the Companyreceives the GPIL Special Dividend Amount 10 Market Days after the Effective Date, it istherefore anticipated that the date for payment of the GPIL Special Dividend Amount to GPILShareholders will be on or about 30 October 2006 or such other date to be determined by theDirectors.

Persons registered in the Register of Members of the Company and Depositors whoseSecurities Accounts are credited with GPIL Shares as at the GPIL Books Closure Date will beentitled to receive their entitlement to the GPIL Special Dividend Amount for each GPIL Shareheld as at the GPIL Books Closure Date.

8.4 Payments to GPIL Shareholders. GPIL Shareholders with GPIL Shares standing to the creditof their Securities Accounts as at the GPIL Books Closure Date will have the cheques forpayment of their entitlements to the GPIL Special Dividend Amount despatched to them by CDPby ordinary post at their own risk or, in the case where such GPIL Shareholders have designatedbank accounts for direct crediting of their dividends and other distributions, have the paymentdirectly credited by CDP to their designated bank accounts.

Shareholders (other than CDP) whose names are registered in the Register of Members of theCompany as at the GPIL Books Closure Date will have the cheques for payment of theirentitlements to the GPIL Special Dividend Amount despatched to them by ordinary post at theirown risk.

9

9. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

Save as disclosed below and in Appendix 3 to this Circular, none of the Directors or SubstantialShareholders has any interest, direct or indirect, in the Scheme, the issue of the New GPILShares and the Renouncement.

The Company’s Chairman, Mr Victor Lo Chung Wing, is also the Chairman of Gold Peak and theChairman of CIHL. The Company’s Executive Vice Chairman, Mr Leung Pak Chuen, is anexecutive director of Gold Peak and an executive director of CIHL. Accordingly, the saidDirectors will abstain from making any recommendations on the Scheme, the issue of the NewGPIL Shares and the Renouncement, to GPIL Shareholders.

As at the Latest Practicable Date, Mr Leung Pak Chuen holds 1,608,000 GPIL Shares,representing approximately 0.35 per cent. of the GPIL Shares in issue. Mr Leung will thereforeabstain from voting on the Ordinary Resolution relating to the Scheme, the issue of the NewGPIL Shares and the Renouncement at the EGM.

10. DIRECTORS’ RECOMMENDATION

Having considered the terms and rationale of the Scheme, the Directors are of the opinion thatthe Scheme, the issue of the New GPIL Shares and the Renouncement are in the interests ofthe Company and GPIL Shareholders. Accordingly, the Directors, save for Mr Victor Lo ChungWing and Mr Leung Pak Chuen (who for reasons set out in paragraph 9 above refrain frommaking any recommendations), recommend that GPIL Shareholders vote in favour of theOrdinary Resolution relating to the Scheme, the issue of the New GPIL Shares and theRenouncement (as set out in the notice of EGM on page 18 of this Circular) to be proposed atthe EGM to be held on 30 August 2006.

11. EXTRAORDINARY GENERAL MEETING

The EGM, notice (the “Notice”) of which is set out on page 18 of this Circular, will be held atMeeting Room 309, Level 3, Suntec Singapore International Convention & Exhibition Centre, 1Raffles Boulevard, Suntec City, Singapore 039593 on 30 August 2006 at 4.00 p.m. for thepurpose of considering and, if thought fit, passing with or without modification, the OrdinaryResolution set out in the Notice.

A Depositor shall not be regarded as a GPIL Shareholder entitled to attend the EGM and tospeak and vote thereat unless he is shown to have GPIL Shares entered against his name in theDepository Register, as certified by CDP as at 48 hours before the EGM.

12. ACTION TO BE TAKEN BY GPIL SHAREHOLDERS

You will find enclosed with this Circular the Notice and a Proxy Form.

If you are unable to attend the EGM and you wish to appoint a proxy to attend and vote on yourbehalf, you should complete, sign and return the attached Proxy Form in accordance with theinstructions printed thereon as soon as possible and, in any event, so as to reach the registeredoffice of the Company at 1 Temasek Avenue, #18-02 Millenia Tower, Singapore 039192, not laterthan 48 hours before the time fixed for the EGM. Your completion and return of a Proxy Form willnot prevent you from attending and voting in person at the EGM if you so wish.

10

13. FINANCIAL ADVISER

The Company has appointed BNP Paribas as its financial adviser in respect of the Scheme. BNPParibas has given and has not withdrawn its written consent to the issue of this Circular with theinclusion of its name and all references to its name in the form and context in which they appearin this Circular.

14. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept responsibility for the accuracy of theinformation given in this Circular and confirm, having made all reasonable enquiries, that to thebest of their knowledge and belief, the facts stated and opinions expressed in this Circular arefair and accurate in all material respects as at the date of this Circular and that there are nomaterial facts the omission of which would make any statement in this Circular misleading.Where information has been extracted and/or reproduced from published and publicly availablesources, the sole responsibility of the Directors has been to ensure that such information isaccurately reproduced in this Circular.

15. ADDITIONAL INFORMATION

Your attention is drawn to the additional information as set out in the Appendices to this Circular.

Yours faithfullyFor and on behalf ofthe Board of Directors ofGP INDUSTRIES LIMITED

Victor Lo Chung WingChairman

11

APPENDIX 1

PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS OFTHE ENLARGED GPIL GROUP

The pro forma unaudited consolidated financial statements of the enlarged GPIL Group have beenprepared using the audited consolidated financial statements of the GPIL Group for FY2005 andFY2006 and are based on the following principal assumptions:

(a) for the pro forma unaudited consolidated profit and loss statements of the enlarged GPIL Groupfor FY2005 and FY2006, the exercise of the Put Option by CIHL and the Scheme have beencompleted on 1 April 2004 and 1 April 2005 respectively;

(b) for the pro forma unaudited consolidated balance sheet of the enlarged GPIL Group as at 31March 2005, the exercise of the Put Option by CIHL and the Scheme have been completed on 31March 2005; and for the pro forma unaudited consolidated balance sheet of the enlarged GPILGroup as at 31 March 2006, the Scheme has been completed on 31 March 2006;

(c) none of the outstanding CIHL Options as at the Latest Practicable Date have been validlyexercised;

(d) the exchange ratio of 3.166 New GPIL Shares for each CIHL Scheme Share;

(e) the total amount of the CIHL Special Dividend paid upon completion of the Scheme wasapproximately S$51,702,531; and

(f) a total of approximately 131,471,003 New GPIL Shares have been issued to the Entitled CIHLScheme Shareholders upon completion of the Scheme.

The following pro forma unaudited consolidated financial statements of the enlarged GPIL Group arefor illustrative purposes only and therefore are not necessarily indicative of the actual results ofoperations and the actual financial position of the enlarged GPIL Group that would have been attainedhad the Scheme and the exercise of the Put Option by CIHL been completed on the respectiveindicative dates as assumed above. The pro forma unaudited financial statements of the enlarged GPILGroup should be read in conjunction with the audited consolidated financial statements of the GPILGroup for FY2005 and FY2006.

12

Pro forma Unaudited Consolidated Profit and Loss Statements for FY2005 and FY2006

FY2005 FY2006S$’000 S$’000

Continuing operations

Revenue 419,833 398,535

Cost of Sales (332,763) (316,422)

Gross Profit 87,070 82,113

Other operating income 19,654 22,975

Distribution Costs (36,490) (35,865)

Administrative expenses (51,968) (52,123)

Exchange Gain 2,501 79

Other operating expenses (2,322) (1,546)

Profit from operations 18,445 15,633

Finance costs (8,933) (11,865)

Exceptional items 15,655 –

Share of results of associates 31,810 27,217

Profit before taxation from continuing operations 56,977 30,985

Income tax expense (14,530) (9,666)

Profit after taxation from continuing operations 42,447 21,319

Discontinued operations

Profit after taxation from discontinued operations(1) 9,126 4,518

Profit for the financial year 51,573 25,837

Attributable to:

Equity holders of the Company 52,829 25,690

Minority interests (1,256) 147

51,573 25,837

Note:

(1) Profit after taxation from discontinued operations refers to the GPIL Group’s net exceptional gain relating to the discontinuedoperations, which has been assumed to have been discontinued on 1 April 2004 and 1 April 2005 for FY2005 and FY2006respectively.

13

Pro forma Unaudited Consolidated Balance Sheets as at 31 March 2005 and 31 March 2006

31 March 2005 31 March 2006S$’000 S$’000

Non-current AssetsInvestment properties 63 –Property, plant and equipment 68,212 55,578Interest in associates 253,589 249,748Investment in unquoted equity shares 51,415 41,172Non-current receivables 146,939 128,241Other investments 2,397 12,458Marketable securities 29,151 18,818Derivative financial instruments – 4,453Deferred tax assets 3,352 3,179Intangible assets (2,183) 15,419

552,935 529,066

Current AssetsInventories 64,290 57,840Receivables and prepayments 156,664 176,433Dividend receivable 3,019 824Taxation recoverable 283 14Marketable securities 49,253 35,458Bank balances, deposits and cash 115,982 94,808

389,491 365,377

Current LiabilitiesTrade and other payables 155,893 132,359Obligations under finance leases 723 689Income tax payable 4,102 3,675Amount due to ultimate holding company 4,767 4,602Floating rate notes 40,500 –Bank loans and overdrafts 112,650 101,297

318,635 242,622

Net Current Assets 70,856 122,755

Non-current LiabilitiesBank loans 146,284 214,675Obligations under finance leases 1,031 355Deferred tax liabilities 1,701 875

149,016 215,905

474,775 435,916

Represented by:Issued capital 118,038 329,507Reserves 350,384 100,567

Shareholders’ funds 468,422 430,074Minority interests 6,353 5,842

474,775 435,916

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APPENDIX 2

FINANCIAL EFFECTS OF THE SCHEME

1. ASSUMPTIONS

For illustrative purposes only, the financial effects of the Scheme have been prepared using theaudited consolidated financial statements of the GPIL Group for FY2006. The financial effectshave been prepared on the following assumptions:

(a) for the purposes of computing the effect on the pro forma NTA value per GPIL Share for theGPIL Group, the Scheme has been completed on 31 March 2006;

(b) for the purposes of computing the effect on the pro forma earnings per GPIL Share (“EPS”)of the GPIL Group, the Scheme and the exercise of the Put Option by CIHL have beencompleted on 1 April 2005;

(c) none of the outstanding CIHL Options as at the Latest Practicable Date have been validlyexercised;

(d) the exchange ratio of 3.166 New GPIL Shares for each CIHL Scheme Share;

(e) the total amount of the CIHL Special Dividend paid upon completion of the Scheme wasapproximately S$51,702,531; and

(f) a total of approximately 131,471,003 New GPIL Shares have been issued to the EntitledCIHL Scheme Shareholders upon completion of the Scheme.

The following financial effects are for illustrative purposes only and therefore are not necessarilyindicative of the actual NTA or EPS position that would have been attained had the Scheme andthe exercise of the Put Option by CIHL been completed on the respective indicated dates asassumed above. The financial effects should be read in conjunction with the audited consolidatedfinancial statements of the GPIL Group for FY2006.

2. SHARE CAPITAL

GPIL Shares (’000)

Number of GPIL Shares in issue as at the date of the Announcementbefore the Scheme 459,079

Number of New GPIL Shares to be issued 131,471

Number of GPIL Shares after the Scheme 590,550

3. EPS

Before the Scheme After the SchemeGPIL Group GPIL Group

FY2006 FY2006

Revenue (S$’000) 398,535 398,535

Profit attributable to shareholders (S$’000) 19,866 25,690

Weighted average number of GPIL Shares (’000) 459,068 590,539

EPS (cents) 4.327 4.350

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4. NTA PER GPIL SHARE

Before the Scheme After the SchemeGPIL Group GPIL Group

As at 31 March 2006 As at 31 March 2006

NTA (S$’000) 357,657 414,655

Number of GPIL Shares (’000) 459,079 590,550

NTA per GPIL Share (S$) 0.779 0.702

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APPENDIX 3

ADDITIONAL INFORMATION

1. DISCLOSURE OF INTERESTS

1.1 Directors. The interests of the Directors in the GPIL Shares and GPIL Options as recorded inthe Register of Directors’ Shareholdings as at Latest Practicable Date are set out below:

Name of Director No. of GPIL Shares

Percentage of totalGPIL Shares in

issue (%)

Total number ofGPIL Options under

the GPIL ShareOption Scheme

Victor Lo Chung Wing – – 2,068,000

Leung Pak Chuen 1,608,000 0.35 730,000

Brian Li Yiu Cheung 1,465,000 0.32 650,000

Andrew Chuang Siu Leung 45,000 0.01 720,000

Wong Man Kit 72,000 0.02 175,000

Lim Ah Doo 210,000 0.05 280,000

Phua Bah Lee 214,000 0.05 160,000

Lim Hock Beng 150,000 0.03 224,000

1.2 Substantial Shareholders. The interests of the Substantial Shareholders in the GPIL Shares asrecorded in the Register of Substantial Shareholders as at the Latest Practicable Date are setout below:

Name of SubstantialShareholder

Direct Interest Deemed Interest Total InterestNo. of GPIL

Shares %No. of GPIL

Shares %No. of GPIL

Shares %

Gold Peak 399,715,443 87.0 – – 399,715,443 87.0

2. MATERIAL LITIGATION

As at the Latest Practicable Date, the Directors are not aware of any litigation, claims orproceedings pending or threatened against the Company or any of its subsidiaries or any factslikely to give rise to any litigation, claims or proceedings which, in the opinion of the Directors,might materially and adversely affect the financial position of the Company and its subsidiariestaken as a whole.

3. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered office of the Company at1 Temasek Avenue, #18-02 Millenia Tower, Singapore 039192 during normal office hours fromthe date of this Circular up to and including the date of the EGM:

(a) the Memorandum and Articles of Association of the Company;

(b) the annual reports of the Company for FY2004, FY2005 and FY2006;

(c) the Announcement;

(d) the Gerard Undertaking;

(e) the letter of consent referred to in paragraph 13 of the Letter to Shareholders on page 11of this Circular; and

(f) the Scheme Document.

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NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Members of GP IndustriesLimited (the “Company”) will be held at Meeting Room 309, Level 3, Suntec Singapore InternationalConvention & Exhibition Centre, 1 Raffles Boulevard, Suntec City, Singapore 039593 on 30 August2006 at 4.00 p.m. for the purpose of considering and, if thought fit, passing, with or without amendment,the following resolution which will be proposed as an Ordinary Resolution:

ORDINARY RESOLUTION

Approval of the Scheme

That:

(a) the privatisation of CIH Limited (“CIHL”) by the Company by way of a scheme of arrangement (the“Scheme”, which expression shall include any such revised Scheme) pursuant to Section 210 ofthe Companies Act, Chapter 50 of Singapore on the terms and conditions set out in the schemedocument dated 11 August 2006 issued by CIHL in relation to the Scheme (or on such other termsand conditions as the Directors may deem to be in the interests of the Company and itsshareholders) be and is hereby approved;

(b) the Directors be authorised to allot and issue up to 133,066,667 new ordinary shares in the capitalof the Company (the “New GPIL Shares”) pursuant to the Scheme;

(c) (i) the renouncement (the “Renouncement”) by the Company in favour of its shareholders ofthe Company’s entitlement to the special dividend of S$0.40 for each ordinary share in CIHLto be paid by CIHL pursuant to the Scheme; and

(ii) pursuant to the Renouncement and subject to the receipt by the Company in full of itsentitlement to such dividend, the payment by the Company of such dividend to allshareholders of the Company in proportion to their holdings of ordinary shares in theCompany as at a books closure date to be determined by the Directors,

be and are hereby approved; and

(d) the Directors and each of them be and hereby authorised to complete and do all such acts andthings (including executing all such documents as may be required in connection with theScheme, the issue of the new GPIL Shares pursuant to the Scheme and the Renouncement) asthey or he may consider desirable, necessary or expedient to give full effect to this OrdinaryResolution, the Scheme, the issue of the New GPIL Shares pursuant to the Scheme and theRenouncement.

BY ORDER OF THE BOARD

Tan San-JuCompany Secretary

11 August 2006Singapore

Notes:

1. A Member of the Company entitled to attend and vote at the Extraordinary General Meeting (the “Meeting”) is entitled toappoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the registered office of the Company at 1 Temasek Avenue, #18-02Millenia Tower, Singapore 039192 not less than 48 hours before the time appointed for holding the Meeting.

18


PROXY FORM FOR EXTRAORDINARY GENERAL MEETING

I/We,

of

being a member/members of GP Industries Limited (the “Company” or “GPIL”), hereby appoint:

Name AddressNRIC/

Passport NumberProportion of

Shareholdings (%)

and/or (delete as appropriate)

or, failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and to vote for me/uson my/our behalf and, if necessary, to demand a poll, at the Extraordinary General Meeting of theCompany to be held at Meeting Room 309, Level 3, Suntec Singapore International Convention &Exhibition Centre, 1 Raffles Boulevard, Suntec City, Singapore 039593 on 30 August 2006 at 4.00 p.m.and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for oragainst the Ordinary Resolution as set out in the Notice of Extraordinary General Meeting. In theabsence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/theywill on any other matter arising at the Extraordinary General Meeting).

Ordinary Resolution For Against

To approve the Scheme, the issue of the New GPIL Shares pursuant tothe Scheme and the Renouncement

Dated this day of 2006.

Total number of GPIL Shares held

Signature(s) of Member(s) or Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

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NOTES:

1. Please insert the total number of ordinary shares held by you. If you have ordinary shares entered against your name in theDepository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert thatnumber of ordinary shares. If you have ordinary shares registered in your name in the Register of Members, you shouldinsert that number of ordinary shares. If you have ordinary shares registered in your name in the Depository Register andordinary shares registered in your name in the Register of Members, you should insert the aggregate number of ordinaryshares entered against your name in the Depository Register and registered in your name in the Register of Members. Ifno number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the ordinary shares heldby you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxiesto attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/hershareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 1 TemasekAvenue, #18-02 Millenia Tower, Singapore 039192 not less than 48 hours before the time appointed for the ExtraordinaryGeneral Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised inwriting. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either underits seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies isexecuted by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must belodged with the instrument.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinksfit to act as its representative at the Extraordinary General Meeting, in accordance with Section 179 of the Companies Act,Chapter 50 of Singapore.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is complete, improperly completedor illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specifiedin the instrument appointing a proxy or proxies. In addition, in the case of ordinary shares entered in the Depository Register,the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is notshown to have ordinary shares entered against his name in the Depository Register as at 48 hours before the time appointedfor holding the Extraordinary General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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