Notice of Extraordinary General Meeting

The Board of Directors of Renaissance Services SAOG (the “Company”) invites all Shareholders to attend an Extraordinary General Meeting, which will be held on Monday, 6^th July, 2015 at 03.00 p.m. at the Meeting Hall of the Capital Market Authority (“CMA”) to discuss the following agenda:

1. To consider and approve the Scheme for the repurchase of 423,141,678 Mandatory Convertible Bonds (“MCBs”)  of RO 43,160,451 issued in 2012, subject to the availability of financing (as per Attachment I)  
2. To consider and approve the issuance of Perpetual Cumulative Capital Certificates by the Company’s wholly owned overseas subsidiary, with a coupon to be determined at the time of issue based on market conditions to raise up to USD 200,000,000 (US Dollars Two Hundred Million) (as per Attachment I) through conventional or Sukuk financing.  

In accordance with the Articles of Association of the Company, any Shareholder may authorize, in writing, any person to attend the meeting and vote on his behalf, provided that the authorization is executed on the Proxy Form issued by Muscat Clearing and Depository (SAOC) attached to this meeting notice. If the proxy is issued by a natural person, a copy of such person ID card in case of adults, copy of the passport in case of women and minors who do not have ID cards and copy of resident card or passport in case of non-Omani must be attached to the Proxy Form. If the proxy is issued by a juristic person the Proxy Form must be sealed by the company’s seal, signed by one of the company’s authorized signatories and copies of the company’s Certificate of Commercial Registration and Authorized Signatories Form must be attached to the Proxy Form.

The Shareholders and their Proxies are requested to be present at the Meeting Hall, at least half an hour prior to the commencement of the EGM for registration.

For further information, please contact Mr. Salah Zarrouq – Company Secretary, on phone no (00968-24700122) or email address: [email protected].

Samir J Fancy                  PricewaterhouseCoopers                 Al Busaidy Mansoor Jamal & Co.

    Chairman                               Auditors                                                Legal Advisor

Renaissance Services SAOG (the “Company”) had issued 423,141,678 MCBs at an Issue Price of RO 0.102, amounting to RO 43.1 million Mandatory Convertible Bonds (“MCBs”)in July 2012 to its shareholders (“Shareholders”) on a rights basis. The purpose of the issuance was to provide capital for financing the investment required for the Company’s growth and to strengthen the Company’s balance sheet.

The MCBs offer investors an annual cash coupon of 3.75% and shares in the Company (“Shares”) upon conversion, which aggregate to an internal rate of return of 16.9% for MCB holders. The conversion of MCBs is scheduled to be carried out in three equal tranches commencing from July 2015, with the remaining two tranches in July 2016 and July 2017.

The Company wishes to obtain an approval of its Shareholders at an extra-ordinary general meeting (“EGM”) to repurchase all MCBs from its MCB holders who wish to tender their MCBs (“Scheme”) subject to the availability of financing.  In the event an MCB holder does not wish to tender his/her MCB’s for sale to the Company, as proposed by the Scheme, such MCB holders shall continue to remain entitled to convert their MCB’s into Shares in accordance with the timetable set out in Section VII Terms and Conditions of the Issue of the Prospectus, pursuant to which the MCB’s were issued to the Shareholders on a rights basis. The proposed Scheme will offer MCB holders the opportunity to secure their return of 16.9%* up to the date of repurchase.

The Company proposes to repurchase the MCBs as follows:

 The Company will cancel all the repurchased MCBs.

The Company proposes to undertake the Scheme to safeguard the interests of all stakeholders namely the MCB holders and Shareholders, particularly those small Shareholders of the Company who did not subscribe for MCBs and hence would be most affected by a significant dilution. The Company’s current Share price of RO 0.322 (June 4, 2015) is lower by 49% than the Company's Net Book Value of RO 0.630 as of December 31, 2014. The main reasons for the lower Share price are due to various extraneous events such as poor market sentiment, depressed oil prices, general state of the global economy and as a consequence, pressure on current trading results. If market sentiment and the Company share price do not improve substantially at the time of conversion, then a large quantum of shares will be issued on conversion of MCBs, resulting in significant capital dilution. This will negatively impact Shareholders particularly small investors in Renaissance who did not subscribe for MCBs.

The proposed Scheme will be positive for each stakeholder and the Company as discussed below:

MCB holders – Upon conversion, MCB holders will receive Shares. Under the current depressed market conditions, they may not be able to sell their Shares at a price that correctly reflects their value and will be unable to realise the expected value of their investments in MCBs. The Scheme will enable MCB holders to receive cash in lieu of Shares at a price which is in line with the agreed IRR up to the date of repurchase. This will protect them from price volatility and liquidity risk.

Shareholders – The conversion of MCBs into Shares (at the prevailing Share price) will create a substantial dilution risk to the Company’s Shareholders, particularly those Shareholders who did not subscribe for MCBs. Additionally, MCB holders and Shareholders may press to sell their shareholdings ahead of each other creating further downward pressure on the share price. In short, the proposed Scheme will protect Shareholders from a collapse in the share price.

Company – The Scheme demonstrates the Company’s confidence in its own value proposition and will assist in avoiding a massive share dilution and in turn will improve the Company's key financial parameters like Return on Equity and Earnings Per Share. This will create a positive outlook for the Company, for its Shareholders, for the MCB holders and for the Capital Market in Oman. To facilitate the Scheme, the Company will raise long term funding in the form of Perpetual Cumulative Capital Certificates at a lower yield than what is currently being offered by the MCBs.

The Company along with its financial advisors have evaluated financing options to repurchase MCBs (the “Financing”) within the parameters of applicable law. One of the options is the issuance of Perpetual Cumulative Capital Certificates (“Perpetual Certificates”) by a wholly owned overseas subsidiary of the Company (“Transaction”) to major local and regional institutional investors. The Company intends to raise up to USD 200,000,000 (US Dollars Two Hundred Million) by way of issuance of Perpetual Certificates. The Certificates could be issued, either in conventional or Sukuk form, which will be determined at a later date based on the feedback of investors, Full details of the Certificates are explained in Appendix I.

Following evaluation of the Financing options, the Company believes Perpetual Certificates to be the best form of financing to replace MCBs due to the following reasons:

• Unamortised long term funding with a lower cost as compared to MCBs.
• Treated as an ‘Equity’ instrument under the International Financial Reporting Standards framework, hence the coupon for Perpetual Certificates will be routed through the Consolidated Statement of Changes in Equity rather than the Consolidated Statement of Comprehensive Income.
• Perpetual in nature with an option with the Company to call back after five years.
• The Company can defer the coupon payment for Perpetual Certificates.

The Company is at an advanced stage of raising finance through Perpetual Certificates and expects financial closure of the Transaction by July 2015.

In this regard, the Company confirms that:

(i)         it shall exercise all reasonable efforts to negotiate the best possible commercial terms for the financing required for purchase of the MCBs;

(ii)        that all financing negotiations shall be conducted in strict confidentiality;

(iii)_     outcome of the financing negotiations shall be disclosed not later than 15 July 2015.

In the event that the Transaction is not finalized on terms acceptable to the Company or for any other market reasons, then the Company may opt not to proceed with any repurchases of the MCBs.

In case the Company wishes to defer the coupons on the Perpetual Cumulative Certificates, Renaissance Services shall not declare or distribute any dividends to the Shareholders, until the Company has settled in full all arrears of coupon.

Please refer to Appendix I for indicative commercial terms and conditions for Perpetual Certificates.

Appendix I