CREATIVE TECHNOLOGY ANNOUNCES ITS INTENTION TO MOVE TO A SINGLE PRIMARY STOCK EXCHANGE LISTING - WILL REMAIN ON SINGAPORE STOCK EXCHANGESINGAPORE - January 28, 2003 - Creative Technology Ltd. (Nasdaq: CREAF) today announced that the Company intends to move to a single primary stock exchange listing. The Company's current listing on the Singapore Exchange Securities Trading Limited ("SGX-ST") would become Creative's sole exchange listing. The Company has the intention to delist its Ordinary Shares from the NASDAQ exchange, and will initiate steps that can facilitate the elimination of its U.S. public reporting obligations. The delisting from NASDAQ would not affect the status of Creative's shares on the SGX-ST.
Creative Will Initiate Steps Toward Delisting From NASDAQ
"We believe our shareholders will be best served if Creative is able to delist from NASDAQ and retain only our exchange listing on the SGX-ST in Singapore," said Sim Wong Hoo, Chairman and CEO of Creative Technology Ltd. "Creative's initial public offering was on the NASDAQ in 1992, and we added a primary listing on the SGX-ST in 1994. Over time, the majority of our shares have moved to the Singapore exchange. Since November 2001, our NASDAQ daily trading volume has declined to a low level, representing less than one-tenth the average daily trading volume of its shares on the SGX-ST over the past six months. And the vast majority of analysts who cover Creative, even for the major U.S. institutions, are based in Singapore."
Sim continued, "With the relatively low trading volume of our shares on NASDAQ and the accessibility of the Singapore exchange to our U.S. shareholders, we believe the rising costs of maintaining our NASDAQ listing and meeting the new SEC reporting requirements are no longer economically justifiable for our company and shareholders. However, through the process we are announcing today, we expect to reduce our current administrative overhead and costs and still provide shareholders access to our highest-volume public equity market, the Singapore exchange, which is one of the premier stock exchanges in all of Asia. We believe it is in our shareholders' best interest that we initiate steps that can facilitate the elimination of our SEC reporting obligations and our intended delisting from NASDAQ."
An overview of the steps Creative is considering taking is included below, and further details will be contained in a Schedule13E-3 filing with the SEC, which will be mailed to shareholders in the near future.
Creative currently has primary listings on both the NASDAQ and the SGX-ST. Creative is obligated to file publicly available reports with the U.S. Securities and Exchange Commission concerning its financial results and other matters. These reports have been filed with the SEC since 1992 when Creative completed its initial public offering in the U.S. With its listing on the SGX-ST in 1994, Creative was further required to comply with the SGX-ST's Continuing Listing Rules. Effective October 6, 1998, Creative obtained an exemption from having to comply with the Listing Rules of SGX-ST, subject to conditions requiring Creative, amongst other matters, to make prompt releases to the SGX-ST and the Singapore market of all announcements and filings made in the U.S.
Rationale for the Delisting from NASDAQ
The administrative overhead and cost of the evolving and increasingly burdensome U.S. reporting obligations has become significant, especially for Creative, a Singapore company with dual primary listings - particularly in relation to the limited benefit that Creative believes it presently derives from its NASDAQ listing. Since November 2001, Creative's SGX-ST trading volume has significantly exceeded the Company's NASDAQ trading volume. Creative's NASDAQ daily trading volume has declined to a low level, representing less than one-tenth the average daily trading volume of its shares on the SGX-ST over the past six months. Additionally, over the past two years, there has been an increasing trend for Creative shares to move from NASDAQ to SGX-ST, where the majority of its shares are currently registered.
For these reasons, and with the potential to substantially reduce administrative overheads and costs while retaining its listing on the SGX-ST (which is also accessible to U.S. shareholders), the Directors of Creative believe it to be in the best interest of the Company and its shareholders for Creative to take the steps to eliminate its U.S. public reporting obligations and seek to delist from NASDAQ while maintaining its SGX-ST listing.
Continued Listing on the SGX-ST
Delisting from NASDAQ will not affect the status of Creative's shares on the SGX-ST. After the intended delisting from NASDAQ, Creative would retain the listing of its Ordinary Shares on the SGX-ST, and would comply with the Continuing Listing Rules of the SGX-ST.
SGX-ST has agreed to Creative retaining its primary listing on SGX main board upon the delisting from NASDAQ subject to compliance with the SGX-ST's Continuing Listing Rules and Creative submitting a listing undertaking to the SGX-ST.
Proposals to reduce the number of shareholders in the U.S.
Creative can eliminate its U.S. public reporting obligations by reducing the number of holders of its Ordinary Shares resident in the U.S. (including holders who own shares in the name of a broker), and the number of holders of options to purchase Ordinary Shares resident in the U.S., in each case to less than 300. As a result, Creative intends to implement proposals to reduce the number of holders of Creative's Ordinary Shares resident in the United States. These proposals would include the termination of the electronic transfer of Creative's Ordinary Shares from the register of the CDP in Singapore to accounts with brokers located in the United States (the "Flow Back Restriction"). Creative may also repurchase its Ordinary Shares on NASDAQ in an open market repurchase program ("Repurchase Program").
Flow Back Restriction
Presently, Creative's Ordinary Shares can be moved between SGX-ST and NASDAQ by electronic transfers through CDP or, in the case of scrip-based shares, the physical transfers of the shares. The Flow Back Restriction will stop the electronic transfer of Creative's Ordinary Shares from the register of the CDP in Singapore to accounts with brokers located in the U.S. so that there will not be an increase in the number of shares in the U.S. arising from the electronic movement of shares from Singapore to the U.S. This will ensure that the number of shares in the U.S. can be reduced by the number of shares that may be transferred from the U.S. to CDP. The Flow Back Restriction does not prevent the physical transfer of shares from Singapore to the U.S.
Creative may also reduce the number of holders of Creative's Ordinary Shares resident in the United States by the repurchase of its Ordinary Shares on NASDAQ in an open market purchase program. The repurchase of shares is authorized under the shareholders' mandate given by Creative's shareholders at its last annual general meeting held on November 20, 2002, which is valid until its next annual general meeting. The share repurchase mandate allows Creative to repurchase up to 7,918,552 shares, which was 10% of its outstanding Ordinary Shares as of November 20, 2002.
Creative currently expects the Flow Back Restriction to commence in March, 2003.
Creative is currently unable to estimate the timing of the proposed delisting from NASDAQ or the termination of its U.S. reporting obligations. Termination of Creative's U.S. reporting obligations and a delisting from NASDAQ would occur if the numbers of U.S. holders of its Ordinary Shares and options to purchase Ordinary Shares are reduced to the levels noted above. Notwithstanding that the number of U.S. holders of its Ordinary Shares and options may not be reduced below these levels, Creative may proceed to delist from NASDAQ at an appropriate time if the number of holders of Creative's Ordinary Shares and options resident in the United States are reduced to such levels as it deems appropriate.
Further announcements will be made by Creative whenever the dates for any of the events noted above are finalized.
Shareholders should note that with effect from the date that the Flow Back Restriction is implemented (to be announced by the Company in due course, but currently expected to commence in March, 2003), The Central Depository (Pte) Limited (CDP) will no longer accept any request for the electronic transfer of Creative shares out of CDP. All depository agents should also take note that cross border arrangements for the transfer of Creative shares out of CDP will no longer be permitted from such date.