Exhibit 99.2

FOR DISTRIBUTION ONLY IN THE UNITED STATES

SCHEME DOCUMENT DATED 9 OCTOBER 2009

THIS SCHEME DOCUMENT IS ISSUED BY CHARTERED SEMICONDUCTOR MANUFACTURING LTD. (THE “COMPANY”). THIS SCHEME DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PLEASE READ IT CAREFULLY.

IF YOU ARE IN ANY DOUBT ABOUT THIS SCHEME DOCUMENT OR THE ACTION YOU SHOULD TAKE, YOU SHOULD CONSULT YOUR STOCKBROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT, TAX ADVISER OR OTHER PROFESSIONAL ADVISER IMMEDIATELY.

If you have sold or transferred all your issued ordinary shares in the capital of the Company, you should immediately forward this Scheme Document and the accompanying Proxy Form to the purchaser or transferee or to the bank, stockbroker or agent through whom you effected the sale for onward transmission to the purchaser or transferee.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Scheme Document.

CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
(Incorporated in the Republic of Singapore)
(Company Registration No. 198703584K)

PROPOSED ACQUISITION OF CHARTERED SEMICONDUCTOR MANUFACTURING LTD.
BY ATIC INTERNATIONAL INVESTMENT COMPANY LLC,
A WHOLLY-OWNED SUBSIDIARY OF ADVANCED TECHNOLOGY INVESTMENT COMPANY LLC,
BY WAY OF A SCHEME OF ARRANGEMENT
UNDER SECTION 210 OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE

Joint Financial Advisers



MORGAN STANLEY ASIA (SINGAPORE) PTE.		CITIGROUP GLOBAL MARKETS SINGAPORE PTE. LTD.
(Incorporated in the Republic of Singapore) (Company Registration No. 199206298Z)		(Incorporated in the Republic of Singapore) (Company Registration No. 199002673E)

Independent Financial Adviser to the Independent Directors

DEUTSCHE BANK AG, SINGAPORE BRANCH


IMPORTANT
ADS Voting Record Date	:	5 October 2009 at 5:00 p.m. (New York time)
Last date and time for receipt by the ADS Depositary of the ADS Voting Instructions Card	:	29 October 2009 at 10:00 a.m. (New York time)
Last date and time for lodgement of Proxy Form for the Court Meeting	:	2 November 2009 at 11:00 a.m.
Date and time of the Court Meeting	:	4 November 2009 at 11:00 a.m.
Place of the Court Meeting	:	Republic Polytechnic Lecture Theatre at W2 (LT-W2) Level 1, 9 Woodlands Avenue 9 Singapore 738964

The action to be taken by you is set out on pages 66 and 67 of this Scheme Document.

The important dates, times and place relating to the Court Meeting and the expected timetable are set out on page 20 of this Scheme Document. Your attention is also drawn to the notes under the expected timetable.

CONTENTS


		Page


DEFINITIONS			4

EXPECTED TIMETABLE			20

CORPORATE INFORMATION			22

HIGHLIGHTS OF THE ACQUISITION BY WAY OF THE SCHEME			24

LETTER TO SHAREHOLDERS			28

1.	INTRODUCTION		28

2.	THE SCHEME		29

3.	PRINCIPAL TERMS OF THE IMPLEMENTATION AGREEMENT		30

4.	THE PREFERENCE SHARE OFFER		38

5.	THE GS OPTION		38

6.	IRREVOCABLE UNDERTAKINGS		39

7.	INFORMATION ON THE COMPANY		40

8.	INFORMATION ON THE ACQUIROR AND ATIC		40

9.	RATIONALE AND BENEFITS OF THE ACQUISITION AND FUTURE PLANS FOR THE GROUP		41

10.	FINANCIAL EVALUATION OF THE SCHEME CONSIDERATION		42

11.	APPROVALS REQUIRED		42

12.	DISCLOSURES		43

13.	OVERSEAS SHAREHOLDERS		43

14.	CONFIRMATION OF FINANCIAL RESOURCES		44

15.	FINANCIAL ADVISERS TO THE BOARD		44

16.	INDEPENDENT DIRECTORS’ RECOMMENDATION		45

CONTENTS



17.	DIRECTORS’ INTENTIONS	47

18.	GENERAL	47

19.	EXTRAORDINARY GENERAL MEETING AND CLASS MEETING	47

20.	DIRECTORS’ RESPONSIBILITY STATEMENT	49

EXPLANATORY STATEMENT		51

1.	INTRODUCTION	51

2.	THE SCHEME	51

3.	PRINCIPAL TERMS OF THE IMPLEMENTATION AGREEMENT	52

4.	THE PREFERENCE SHARE OFFER	52

5.	THE GS OPTION	53

6.	IRREVOCABLE UNDERTAKINGS	53

7.	INFORMATION ON THE COMPANY	54

8.	INFORMATION ON THE ACQUIROR AND ATIC	55

9.	RATIONALE AND BENEFITS OF THE ACQUISITION AND FUTURE PLANS FOR THE GROUP	55

10.	COURT MEETING	55

11.	REGULATORY APPROVALS	56

12.	EFFECT OF THE SCHEME	57

13.	IMPLEMENTATION OF THE SCHEME	58

14.	BOOKS CLOSURE DATE	60

15.	SETTLEMENT AND REGISTRATION PROCEDURES	61

16.	DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN THE COMPANY SHARES	62

CONTENTS



17.	OVERSEAS SHAREHOLDERS	62

18.	TAXATION	63

19.	ACTION TO BE TAKEN BY SHAREHOLDERS AND ADS HOLDERS	66

20.	IFA’S ADVICE TO THE INDEPENDENT DIRECTORS	67

21.	GENERAL	67

APPENDIX 1A: FAIRNESS OPINION FROM MORGAN STANLEY TO THE BOARD		68

APPENDIX 1B: FAIRNESS OPINION FROM CITI TO THE BOARD		71

APPENDIX 2: LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME		74

APPENDIX 3: LETTER FROM THE ACQUIROR TO SHAREHOLDERS		101

APPENDIX 4: GENERAL INFORMATION RELATING TO THE COMPANY		113

APPENDIX 5: SCHEME CONDITIONS		146

APPENDIX 6: PRESCRIBED OCCURRENCES		154

APPENDIX 7: ACQUIROR’S REPRESENTATIONS AND WARRANTIES		156

APPENDIX 8: COMPANY’S REPRESENTATIONS AND WARRANTIES		158

APPENDIX 9: EXTRACTS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY		169

APPENDIX 10: OUTLOOK		205

APPENDIX 11: LETTER FROM THE IFA ON THE OUTLOOK		211

THE SCHEME		213

NOTICE OF THE COURT MEETING		220

DEFINITIONS

In this Scheme Document, the following definitions apply throughout except where the context otherwise requires:


“Abu Dhabi”		: The Emirate of Abu Dhabi, United Arab Emirates.

“Accelerated Amount”		: Has the meaning given to it in Paragraph 3.10 of the Company’s Letter to Shareholders.

“Acquiror”		: ATIC International Investment Company LLC, a company incorporated in Abu Dhabi and having its offices at Mamoura Building A, Muroor Road, Abu Dhabi.

“Acquiror Affiliates”		: The parties acting in concert with the Acquiror (including ATIC and its subsidiaries) from time to time.

“Acquiror Convertible Securities”		: Securities which carry voting rights in the Acquiror or are convertible into Acquiror Shares or securities which carry voting rights in the Acquiror, or rights to subscribe for, or options in respect of, such Acquiror Shares or securities.

“Acquiror Directors”		: The directors of the Acquiror as at the Latest Practicable Date.

“Acquiror Shares”		: Issued and paid-up ordinary shares in the capital of the Acquiror.

“Acquisition”		: The proposed acquisition of the Company by the Acquiror pursuant to the Implementation Agreement.

“ACRA”		: The Accounting and Corporate Regulatory Authority of Singapore.

“ADRs” or “American Depositary Receipts”		: The certificates issued by the ADS Depositary to evidence the ADSs issued under the terms of the ADS Deposit Agreement, as such ADRs may be amended from time to time in accordance with the provisions of the ADS Deposit Agreement.

“ADSs” or “American Depositary Shares”		: The rights and interests in the Company Shares deposited under the ADS Deposit Agreement granted to the ADS Holders and beneficial owners pursuant to the terms and conditions of the ADS Deposit Agreement and, if applicable, the ADRs issued to evidence the ADSs issued thereunder. Each ADS represents the right to receive 10 Company Shares on deposit with the ADS Custodian Bank.

“ADS Custodian Bank”		: Citibank Nominees Singapore Pte Ltd.

“ADS Deposit Agreement”		: The Deposit Agreement by and among the Company, the ADS Depositary, the ADS Holders and beneficial owners of

DEFINITIONS


		ADSs evidenced by ADRs issued thereunder, dated 4 November 1999, as amended on 26 September 2007.

“ADS Depositary”		: Citibank, N.A.

“ADS Depositary Notice”		: The notice given by the ADS Depositary to the ADS Holders as at the ADS Voting Record Date to provide, inter alia, notice of (i) how an ADS Holder may instruct the ADS Depositary to vote, or cause the ADS Custodian Bank to vote, the Company Shares underlying such ADS Holder’s ADSs at the Court Meeting and at the EGM, and (ii) the termination of the ADS Deposit Agreement (conditional upon the effectiveness of the Scheme).

“ADS Holder”		: The person or entity in whose name an ADS is registered on the books of the ADS Depositary maintained for such purpose. An ADS Holder may or may not be a beneficial owner of the ADSs. If an ADS Holder is not the beneficial owner of the ADSs registered in its name, such ADS Holder shall be deemed to have all requisite authority to act on behalf of the beneficial owners of the ADSs.

“ADS Voting Deadline”		: 10:00 a.m. (New York time) on 29 October 2009, being the latest time by which the ADS Voting Instructions Cards must be received by the ADS Depositary.

“ADS Voting Instructions Card”		: The voting instructions card for use by ADS Holders to instruct the ADS Depositary to vote the Company Shares represented by their ADSs in connection with the Court Meeting.

“ADS Voting Record Date”		: 5:00 p.m. (New York time) on 5 October 2009.

“Announcement”		: The joint announcement by the respective boards of directors of the Company and the Acquiror dated 7 September 2009 in relation to the Acquisition by way of the Scheme.

“Announcement Date”		: 7 September 2009, being the date of the Announcement.

“Applicable Laws”		: With respect to any person, any national, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgement, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such person, as amended unless expressly specified otherwise.

DEFINITIONS


“Articles”		: The Articles of Association of the Company.

“ATIC”		: Advanced Technology Investment Company LLC, a company incorporated in Abu Dhabi and having its offices at Mamoura Building A, Muroor Road, Abu Dhabi.

“ATIC Convertible Securities”		: Securities which carry voting rights in ATIC or are convertible into ATIC Shares or securities which carry voting rights in ATIC, or rights to subscribe for, or options in respect of, such ATIC Shares or securities.

“ATIC Directors”		: The directors of ATIC as at the Latest Practicable Date.

“ATIC Shares”		: Issued and paid-up ordinary shares in the capital of ATIC.

“Auditors”		: KPMG LLP, the auditors of the Company for the time being.

“Auditors’ Letter on the Outlook”		: Letter dated 22 September 2009 containing the report of the Auditors on the Outlook.

“Board”		: The board of directors of the Company.

“Books Closure Date”		: A date and time (before the Effective Date) to be announced by the Company on which the Transfer Books and the Register of Members of the Company will be closed in order to determine the entitlements of Shareholders under the Scheme.

“Business Day”		: Unless otherwise expressly specified, (i) a day (excluding Fridays, Saturdays and gazetted public holidays in Abu Dhabi) on which commercial banks are open for business in Abu Dhabi in relation to acts or matters to be done or delivered pursuant to the Implementation Agreement in such location or to acts or matters to be done or delivered by the Acquiror, (ii) a day (excluding Saturdays, Sundays and gazetted public holidays in Singapore) on which commercial banks are open for business in Singapore in relation to acts or matters to be done or delivered pursuant to the Implementation Agreement in such location or to acts or matters to be done or delivered by the Company and (iii) a day (excluding Fridays, Saturdays, Sundays and gazetted public holidays) on which commercial banks are open for business in Abu Dhabi and Singapore in relation to acts or matters to be done or delivered pursuant to the Implementation Agreement in both locations (such acts or matters to include the transfer of funds by the Acquiror for settlement of the Scheme Consideration).

“CDP”		: The Central Depository (Pte) Limited.

DEFINITIONS


“CEO”		: Chief Executive Officer.

“Citi”		: Citigroup Global Markets Singapore Pte. Ltd.

“Class Meeting”		: Has the meaning given to it in Paragraph 19.1 of the Company’s Letter to Shareholders.

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

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

“Company”		: Chartered Semiconductor Manufacturing Ltd.

“Company Convertible Securities”		: Securities which carry voting rights in the Company or are convertible into Company Shares or securities which carry voting rights in the Company, or rights to subscribe for, or options in respect of, such Company Shares or securities.

“Company Shares”		: Issued and paid-up ordinary shares in the capital of the Company from time to time.

“Competing Offer”		: Any offer or proposal by any person (other than the Acquiror or the parties acting in concert with it), pursuant to which such person or any other person may, whether directly or indirectly, and whether by share purchase, scheme of arrangement or amalgamation, capital reconstruction, purchase of assets, tender offer, general offer, partial offer, joint venture, dual listed company structure or otherwise:



		(i)	acquire or become the holder or owner of, or otherwise have an economic interest in: (a) all or substantially all the assets, business and/or undertakings of the Company, or any Relevant Group Company, or (b) all or a significant portion of the share capital of the Company, or (c) any part of the share capital of a Relevant Group Company which is held by the Company;

		(ii)	acquire control of the Group;

		(iii)	merge with the Company or a Relevant Group Company; or

		(iv)	effect a transaction which would preclude or restrict the Scheme or the Offer, as the case may be, or the Acquisition,



		and for the purpose of this definition, a Competing Offer (I) will be deemed to be for “substantially all of the assets,

DEFINITIONS


		business and/or undertakings” of the Company or any Relevant Group Company if the relevant assets, business and/or undertakings in question computed on any of the bases set out in rules 1006(a) to 1006(c) of the Listing Manual (if applicable) amount to 30 per cent. or more, except that the net asset figures used for comparison with the transaction under consideration will be taken from the later of the latest audited accounts or the latest unaudited accounts (if any) of the Company or the Relevant Group Company and (II) shall not include the exercise of any call option by the shareholders under the CSP JVA.

“Compulsory Acquisition”		: The compulsory acquisition of Company Shares by the Acquiror pursuant to Section 215(1) of the Companies Act in the event that the Offer becomes or is declared unconditional in all respects and the Acquiror has received acceptances in respect of not less than 90 per cent. of the number of Company Shares which are the subject of the Offer (other than Company Shares already held at the date of the Offer by the Acquiror, its related corporations or their respective nominees).

“Compulsory Acquisition Completion Date”		: The date and time of the completion of the Compulsory Acquisition.

“Consideration”		: The amount payable by the Acquiror for each Company Share to which the Scheme or the Offer relates, in accordance with the terms of the Scheme or the Offer, as the case may be.

“Conversion Agent”		: Has the meaning given to it in Article 4A of the Articles.

“Conversion Notice”		: Has the meaning given to it in Article 4A of the Articles.

“Converted Amount”		: Has the meaning given to it in Paragraph 13.3.1 of the Explanatory Statement.

“COO”		: Chief Operating Officer.

“Court”		: The High Court of Singapore.

“Court Meeting”		: The meeting of Shareholders to be convened at the direction of the Court to approve the Scheme, notice of which is set out on pages 220 and 221 of this Scheme Document, and any adjournment thereof.

“Court Order”		: The order of the Court approving the Scheme under Section 210 of the Companies Act.

DEFINITIONS


“Credit Suisse”		: Credit Suisse (Singapore) Limited.

“CRPS”		: Convertible redeemable preference shares in the capital of the Company, having the rights and subject to the restrictions set out in Article 4A of the Articles.

“CSP JVA”		: The Amended and Restated Joint Venture Agreement dated 23 October 2001 among the Company, EDB Investments Pte Ltd, Singapex Investments Pte Ltd and Avago Technologies General IP (Singapore) Pte. Ltd., as amended and supplemented by Amendment Agreement No. 1 dated 31 January 2002 and Deed of Accession and Ratification dated 26 January 2006.

“DB Related Entities”		: Has the meaning given to it in Paragraph 3.1.1(iii) of Appendix 4 of this Scheme Document.

“Deutsche Bank”		: Deutsche Bank AG, Singapore Branch.

“Directors” or “Company Directors”		: The directors of the Company as at the Latest Practicable Date.

“DTC”		: The Depository Trust Company, being the book-entry settlement facility for ADSs in the United States.

“Early Redemption Price”		: Has the meaning given to it in Article 4A of the Articles.

“Effective Date”		: The date on which the Scheme, if approved, becomes effective in accordance with its terms.

“EGM”		: Has the meaning given to it in Paragraph 19.1 of the Company’s Letter to Shareholders.

“Encumbrances”		: All charges, mortgages, liens, hypothecations, judgments, encumbrances, easements, rights of pre-emption, securities, title retentions, preferential rights, preferential arrangements, trust arrangements or all other security interests or all other agreements or arrangements having a commercial effect analogous to the conferring of security or a similar right in favour of any person, and “Encumbrance” shall mean any of the above.

“Entitled Shareholders”		: Shareholders as at 5:00 p.m. on the Books Closure Date.

“ERCC”		: The Executive Resource and Compensation Committee of the Company.

“ESOP”		: The Company’s Share Option Plan 1999 approved and adopted on 30 March 1999, as amended and restated on

DEFINITIONS


		30 May 2001 and as the same may be further modified or altered from time to time.

“Exchange Act”		: U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Explanatory Statement”		: The Explanatory Statement in compliance with Section 211 of the Companies Act as set out on pages 51 to 67 of this Scheme Document.

“Fairness Opinion”		: Each of:

		(i) the oral opinion of Morgan Stanley, subsequently confirmed in writing, addressed solely to the Board, as to the fairness of the Scheme Consideration from a financial point of view to the holders of Company Shares (including Company Shares held in the form of ADSs), which is set out in Appendix 1A of this Scheme Document; and

		(ii) the oral opinion of Citi, subsequently confirmed in writing, addressed solely to the Board, as to the fairness of the Scheme Consideration from a financial point of view to the Shareholders and the ADS Holders (in each case, other than STS), which is set out in Appendix 1B of this Scheme Document,

		and “Fairness Opinions” shall mean both of them.

“FAs”		: Morgan Stanley Asia (Singapore) Pte. and Citigroup Global Markets Singapore Pte. Ltd., the joint financial advisers to the Board in connection with the Acquisition and the Scheme.

“Fee”		: Has the meaning given to it in Paragraph 3.9 of the Company’s Letter to Shareholders.

“First Restricted Period”		: The period from and including the Announcement Date to the date of termination of the Implementation Agreement in accordance with its terms and for a period of six months after such termination.

“FY”		: Financial year ended or ending 31 December of a particular year, as the case may be. Where “FY” is stated immediately before reference to a calendar year, it shall mean the financial year ended or ending 31 December of that calendar year.

“GLOBALFOUNDRIES”		: GlobalFoundries, Inc.

DEFINITIONS


“GLOBALFOUNDRIES Employment Agreement”		: The employment agreement dated 29 September 2009 between Chia Song Hwee and GLOBALFOUNDRIES.

“Governmental Authority”		: Any domestic or foreign national, federal, state or local, government or governmental, semi-governmental, administrative, regulatory, fiscal or judicial agency, authority, body, commission, department, exchange, tribunal, court, agency, official or entity, including any political subdivision thereof.

“Group”		: The Company and its subsidiaries, and “Group Company” shall mean any company in the Group.

“GS”		: Goldman Sachs International.

“GS Option”		: The equity option transaction entered into between the Company and GS, as evidenced by the confirmation dated 27 March 2007 (reference number LTAA1419140936.0.0.0/00643091201), as amended and supplemented from time to time between the Company and GS.

“IFA”		: Deutsche Bank AG, Singapore Branch, the independent financial adviser to the Independent Directors.

“IFA’s Letter on the Outlook”		: Letter containing the report of the IFA on the Outlook as set out in Appendix 11 of this Scheme Document.

“IFA’s Letter on the Scheme”		: Has the meaning given to it in Paragraph 15.2 of the Company’s Letter to Shareholders.

“Implementation Agreement”		: The Implementation Agreement dated 7 September 2009 between the Company and the Acquiror to effect the Acquisition by way of the Scheme.

“Independent Directors”		: The Directors who are considered independent under the Code for the purposes of making a recommendation to Shareholders on the Scheme or, where relevant, the Offer.

“IR Code”		: The United States Internal Revenue Code of 1986, as amended.

“Irrevocable Undertakings”		: The STS Irrevocable Undertaking and the Management Executive Irrevocable Undertakings.

“Latest Practicable Date”		: 1 October 2009, being the latest practicable date prior to the printing of this Scheme Document.

“Listing Manual”		: The Listing Manual of the SGX-ST, as amended or modified from time to time.

DEFINITIONS


“Long-Stop Date”		: 8 March 2010, as may be extended as described in Paragraph 3.1 of the Company’s Letter to Shareholders.

“Management Executive Irrevocable Undertakings”		: The letters of undertaking dated 7 September 2009 between (i) each of Chia Song Hwee and George Thomas, and (ii) the Acquiror and ATIC, pursuant to which each of Chia Song Hwee and George Thomas has given an irrevocable undertaking to the Acquiror to, inter alia, vote in favour of the Scheme, on terms described in Paragraph 6.2 of the Company’s Letter to Shareholders, and “Management Executive Irrevocable Undertaking” shall mean either of them.

“Market Day”		: A day on which the SGX-ST is open for trading of securities or, where applicable, a day on which Nasdaq is open for trading of securities.

“Matching Offer Determination”		: Has the meaning given to it in Paragraph 3.5.3 of the Company’s Letter to Shareholders.

“Matching Right”		: Has the meaning given to it in Paragraph 3.5.1 of the Company’s Letter to Shareholders.

“Matching Right Notification”		: Has the meaning given to it in Paragraph 3.5.1 of the Company’s Letter to Shareholders.

“Matching Right Period”		: Has the meaning given to it in Paragraph 3.5.2 of the Company’s Letter to Shareholders.

“Material Obligations”		: Means the obligations of the Company under the Implementation Agreement:

		(i) to comply with certain procedural aspects relating to the implementation of the Scheme, including:

		(a) taking all steps required to be taken by it in relation to the Scheme;

		(b) the preparation of this Scheme Document;

		(c) making an application to the Court for order(s) to convene the Court Meeting;

		(d) despatching this Scheme Document;

		(e) applying to the Court for the Court Order if the Scheme is approved by the requisite majorities at the Court Meeting;

		(f) lodging the Court Order with ACRA;

DEFINITIONS


		(g) ensuring that the Company, through its legal counsel, is represented at Court hearings convened for the purpose of Section 210 of the Companies Act; and

		(h) not taking any action which may frustrate or be prejudicial to the successful completion of the Acquisition or the implementation of the Scheme, subject to the provisions described in Paragraph 3.5 of the Company’s Letter to Shareholders; and

		(ii) as described in Paragraphs 3.5, 3.7 and 19 of the Company’s Letter to Shareholders.

“Morgan Stanley”		: Morgan Stanley Asia (Singapore) Pte.

“Nasdaq”		: Nasdaq Global Select Market.

“Nasdaq Listing Rules”		: The Listing Rules of Nasdaq, as amended or modified from time to time.

“Net Converted Amount”		: Has the meaning given to it in Paragraph 13.3.2 of the Explanatory Statement.

“New Member”		: Has the meaning given to it in Paragraph 19.2.1 of the Company’s Letter to Shareholders.

“No-Shop Period”		: The period commencing from the Announcement Date to the termination of the Implementation Agreement in accordance with its terms or, where the Switch Option is validly exercised, to the later of the closing date of the Offer or the date the Offer lapses or is withdrawn.

“Offer”		: The voluntary conditional cash offer by or on behalf of the Acquiror to acquire Company Shares not already owned, controlled or agreed to be acquired by the Acquiror, on the terms and subject to the conditions which will be set out in the offer document issued for or on behalf of the Acquiror.

“Offer Cut-Off Date”		: The closing date of the Offer, provided that:

		(i) the Offer has become or been declared unconditional in all respects; and

		(ii) the Acquiror is entitled to exercise its rights of Compulsory Acquisition.

“Options”		: Options granted by the Company pursuant to the ESOP.

DEFINITIONS


“Outlook”		: The outlook set forth in Appendix 1 to the Company’s guidance for the third quarter ended 30 September 2009 that was released by the Company on 22 September 2009 and reproduced in Appendix 10 of this Scheme Document, which updated the Company’s third quarter 2009 guidance originally provided on 24 July 2009.

“Overseas Shareholders”		: Shareholders whose addresses are outside Singapore and the United States as shown on the Register of Members of the Company and the Depository Register maintained by CDP.

“Parties”		: The Company and the Acquiror, and “Party” shall mean either of them.

“PFIC”		: Passive foreign investment company, as the term is defined under United States taxation law.

“Preference Share Holders”		: Holders of CRPS.

“Preference Share Offer”		: The offer to be made by the Acquiror to the Preference Share Holders, as described in Paragraph 3.1 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document.

“Prescribed Occurrences”		: Any event, reproduced in Appendix 6 of this Scheme Document, the occurrence of which between the Announcement Date and the Record Date would be a failure to fulfill one of the Scheme Conditions.

“Proxy Form”		: The proxy form for the Court Meeting.

“PSU Plan”		: The Company’s Performance Share Unit Plan 2007, approved and adopted on 24 April 2007, as the same may be modified or altered from time to time.

“PSUs”		: Units granted under the PSU Plan.

“Record Date”		: The date falling on the Business Day in Singapore immediately preceding the Effective Date.

“Redemption Amount”		: Has the meaning given to it in Article 4A of the Articles.

“Register of Substantial Shareholders”		: The Register of Substantial Shareholders of the Company.

“Relevant Group Company”		: Any of Chartered Semiconductor Manufacturing (Tampines) Pte. Ltd., Chartered Silicon Partners Pte Ltd and SMP.

DEFINITIONS


“Restricted Affiliates”		: Certain persons (other than the Acquiror Affiliates) agreed in writing between the Parties at the Announcement Date.

“RSU Plan”		: The Company’s Restricted Share Unit Plan 2007, approved and adopted on 24 April 2007, as the same may be modified or altered from time to time.

“RSUs”		: Units granted under the RSU Plan.

“Scheme”		: The scheme of arrangement under Section 210 of the Companies Act, on the terms and subject to the conditions set out in this Scheme Document, as such Scheme may be amended or revised from time to time.

“Scheme Conditions”		: The conditions precedent which must (unless, where applicable, waived) be satisfied by not later than 5:00 p.m. on the Long-Stop Date (or such other date as the Company and the Acquiror may agree) for the Scheme to be implemented, and which are reproduced in Appendix 5 of this Scheme Document.

“Scheme Consideration”		: The cash amount of S$2.68 for each Scheme Share to be paid by the Acquiror to each Entitled Shareholder in accordance with the terms of the Scheme.

“Scheme Document”		: This document dated 9 October 2009 and any other document(s) which may be issued by or on behalf of the Company to amend, revise, supplement or update the document(s) from time to time.

“Scheme Shares”		: Has the meaning given to it in Paragraph 2.3 of the Company’s Letter to Shareholders.

“SEC”		: The Securities and Exchange Commission of the United States.

“Second Restricted Period”		: The period from and including the Announcement Date to the later of (i) the date falling two years after the date of termination of the Implementation Agreement or (ii) the date

		when the aggregate direct or indirect shareholding of the Acquiror and the Acquiror Affiliates falls below one per cent. of the voting rights of the Company from time to time.

“Securities Account”		: The securities account maintained by a Depositor with CDP but excluding any securities sub-account.

“Securities Act”		: U.S. Securities Act of 1933, as amended.

“SGXNET”		: The website of the SGX-ST.

DEFINITIONS


“SGX-ST”		: Singapore Exchange Securities Trading Limited.

“Shareholders”		: Persons who are registered as holders of Company Shares in the Register of Members of the Company and, where such person is CDP, Depositors who have Company Shares entered against their names in the Depository Register.

“SIC”		: The Securities Industry Council of Singapore.

“SIC Competitive Procedure”		: Any procedure which may, from time to time, be established by the SIC to resolve a competitive situation.

“Singapore”		: The Republic of Singapore.

“Singapore Dollars” or “S$”		: Singapore dollars, being the lawful currency of Singapore.

“SMP”		: Silicon Manufacturing Partners Pte Ltd.

“Special Resolution (1)”		: Has the meaning given to it in Paragraph 19.1 of the Company’s Letter to Shareholders.

“Special Resolution (2)”		: Has the meaning given to it in Paragraph 19.1 of the Company’s Letter to Shareholders.

“STS”		: Singapore Technologies Semiconductors Pte Ltd.

“STS Irrevocable Undertaking”		: The letter of undertaking dated 7 September 2009 between STS and the Acquiror and ATIC, pursuant to which STS has given an irrevocable undertaking to the Acquiror to, inter alia, vote in favour of the Scheme, on terms described in Paragraph 6.1 of the Company’s Letter to Shareholders.

“Substantial Shareholder”		: Any person holding interests in five per cent. or more of all the Company Shares.

“Superior Offer”		: Has the meaning given to it in Paragraph 3.5.1 of the Company’s Letter to Shareholders.

“Switch Option”		: Has the meaning given to it in Paragraph 3.6.1 of the Company’s Letter to Shareholders.

“Termination Right”		: Has the meaning given to it in Paragraph 3.3 of the Company’s Letter to Shareholders.

“Transfer Books”		: The transfer books of the Company.

“Transfer Consideration”		: The Consideration, subject to any adjustments, if required, in the event of a sub-division or consolidation of the ordinary share capital of the Company, such adjustments to be determined by the Board of Directors of the Company as appropriate.

DEFINITIONS


“Transfer Date”		: Means:

		(i) where the Acquisition is to be effected by way of a Scheme:

		(a) in the case of any new Company Shares which are issued to any New Member after the Voting Record Time and on or prior to the Effective Date, the date and time immediately after the Effective Date; and

		(b) in the case of any new Company Shares which are issued to any New Member after the Effective Date, the date and time immediately after the issue of any such new Company Shares; and

		(ii) where the Acquisition is to be effected by way of an Offer:

		(a) in the case of any new Company Shares which are issued to any New Member after the Offer Cut-Off Date and on or prior to the Compulsory Acquisition Completion Date, the date and time immediately after the Compulsory Acquisition Completion Date; and

		(b) in the case of any new Company Shares which are issued to any New Member after the Compulsory Acquistion Completion Date, the date and time immediately after the issue of any such new Company Shares.

“United States” or “U.S.”		: The United States of America, its territories and possessions, any State of the United States of America and the District of Columbia.

“United States Dollars” and “US$”		: United States dollars, being the lawful currency of the United States.

“Unsolicited Offer”		: Has the meaning given to it in Paragraph 3.7.2 of the Company’s Letter to Shareholders.

“U.S. Treasury”		: The Treasury of the United States.

“Voting Record Time”		: 48 hours before the date and time of the Court Meeting.

DEFINITIONS


“VWAP”		: Volume weighted average price.

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

Acting in Concert. The term “acting in concert” shall have the meaning given to it in the Code.

Announcement, Notice, etc. References to the making of an announcement or the giving of notice by the Company shall include the release of an announcement by the FAs or advertising agents, for and on behalf of the Company, to the press or the delivery of or transmission by telephone, facsimile, SGXNET or otherwise of an announcement to the SGX-ST. An announcement made otherwise than to the SGX-ST shall be notified simultaneously to the SGX-ST. All announcements to the SGX-ST or made otherwise than to the SGX-ST shall simultaneously be submitted to the SEC via a report on Form 6-K.

Depositors, etc. The terms “Depositor” and “Depository Register” shall have the meanings given to them respectively in Section 130A of the Companies Act.

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

Headings. The headings in this Scheme Document are inserted for convenience only and shall be ignored in construing this Scheme Document.

Rounding. Any discrepancies in the figures included in this Scheme Document between the amounts shown and the totals thereof are due to rounding. Accordingly, figures shown as totals in this Scheme Document may not be an arithmetic aggregation of the figures that precede them.

Shareholders. Any reference to “you”, “your” and “yours” in this Scheme Document are, as the context so determines, to Shareholders unless the context otherwise requires.

Statutes. Any reference in this Scheme Document to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined in the Companies Act or the Code or any statutory modification thereof and used in this Scheme Document shall, where applicable, have the meaning assigned to it under the Companies Act or the Code, or any modification thereof, as the case may be, unless the context otherwise requires.

Time and Date. Any reference to a time of day and date in this Scheme Document shall be a reference to Singapore time and date, unless otherwise specified.

Total Number of Company Shares. In this Scheme Document, the total number of Company Shares as at the Latest Practicable Date was 942,060,579 Company Shares.

Scheme not Subject to Tender Offer or Proxy Rules under the Exchange Act. The Acquisition relates to the shares of a Singapore company and is proposed to be made by means of a scheme of arrangement under Singapore company law. The Scheme is not subject to the tender offer or proxy rules under the Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in schemes of arrangements in Singapore, which differ from the requirements of United States tender offer and proxy rules. If the Acquiror exercises its right in the future to make an Offer, the Offer will be made in compliance with the applicable U.S. laws and regulations and the Code.

Forward-looking Statements. This Scheme Document contains forward-looking statements, which are made pursuant to the safe harbour provisions of the United States Private Securities Litigation Reform

DEFINITIONS

Act of 1995. These forward-looking statements include, without limitation, statements relating to the future plans of the Company following the Acquisition and the expected benefits from the Acquisition. These forward-looking statements are based on the current expectations of the management of the Company and the Acquiror (as applicable) and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as the Company and the Acquiror cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. In particular, the Company and the Acquiror cannot assure you that the Acquisition will be approved by the Shareholders or that the Scheme Conditions will be satisfied or that the Acquisition will occur. Neither the Company nor the Acquiror undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

No Offer to Sell or Purchase Securities. This Scheme Document does not constitute an offer to sell, or a solicitation of, or an offer to purchase, Company Shares or ADSs or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make the offer, solicitation of an offer or proxy solicitation in that jurisdiction. The delivery of this Scheme Document does not mean, under any circumstances, that there has been no change in the information set forth in this Scheme Document or in the Company’s affairs since the Latest Practicable Date.

Distribution of the Scheme Document: This Scheme Document is substantially the same as the Scheme Document despatched to Shareholders whose addresses are outside of the United States as shown on the Register of Members of the Company and the Depository Register maintained by CDP, which can be located on the website of the SGX-ST at www.sgx.com and website of the Company at www.charteredsemi.com, except that this Scheme Document omits the Auditors’ Letter on the Outlook. The Auditors’ Letter on the Outlook is specifically excluded from, and is also not incorporated by reference in, this Scheme Document.

EXPECTED TIMETABLE


ADS Voting Record Date	:	5 October 2009, 5:00 p.m. (New York time)⁽¹⁾

Latest date and time for receipt by the ADS Depositary of the ADS Voting Instructions Card	:	29 October 2009, 10:00 a.m. (New York time)

Latest date and time for lodgement of the Proxy Form	:	2 November 2009, 11:00 a.m.⁽²⁾⁽³⁾

Date and time of the Court Meeting	:	4 November 2009, 11:00 a.m.

Place of the Court Meeting	:	Republic Polytechnic Lecture Theatre at W2 (LT-W2) Level 1, 9 Woodlands Avenue 9 Singapore 738964

Expected date of the Court hearing the application to approve the Scheme	:	12 November 2009

Expected last day of trading of the Company Shares on the SGX-ST	:	4 December 2009

Expected Books Closure Date	:	9 December 2009, 5:00 p.m.⁽⁴⁾

Expected Record Date	:	9 December 2009⁽⁵⁾

Expected Effective Date	:	10 December 2009⁽⁶⁾

Expected date of termination of the ADS Deposit Agreement and expected last day of trading of the ADSs	:	10 December 2009⁽⁵⁾

Expected date for the payment of the Scheme Consideration	:	By 18 December 2009⁽⁵⁾

Expected date for delisting of the Company from the SGX-ST	:	On or about 18 December 2009⁽⁵⁾

Expected date for delisting of the ADSs from Nasdaq	:	On or about 21 December 2009⁽⁵⁾

You should note that save for the ADS Voting Record Date, the last date and time for receipt by the ADS Depositary of the ADS Voting Instructions Card, the last date and time for lodgement of the Proxy Form and the date and time of the Court Meeting, the above timetable is indicative only and may be subject to change. In particular, the lodgement of the Court Order with ACRA (which is when the Scheme will become effective) will not be made unless all other Scheme Conditions have been satisfied (or, where applicable, waived). In addition, the actual Record Date and Effective Date will be set after taking into account the time and processes required to arrange for the logistics of the completion of the Acquisition, including with respect to the mechanics of the necessary drawdown of the financing put in place for the Acquisition. For the events listed above and in this Scheme Document, which are described as “expected”, please refer to future announcement(s) by the Company to the SGX-ST and submitted to the SEC via a report on Form 6-K for the exact dates and times of these events.

EXPECTED TIMETABLE

Notes:


(1)		Withdrawal of the Company Shares underlying the ADSs is expected to be suspended from the ADS Voting Record Date to the conclusion of the Court Meeting.

(2)		Shareholders are requested to lodge the Proxy Forms not less than 48 hours before the time appointed for the Court Meeting, but if they are not so lodged, they may be handed to the Chairman of the Court Meeting at the Court Meeting and before the commencement of the Court Meeting.

(3)		All Proxy Forms (if lodged before the Court Meeting) must be lodged with the Company Secretary at the registered office of the Company at 60 Woodlands Industrial Park D Street 2 Singapore 738406. Completion and lodgement of a Proxy Form will not preclude a Shareholder from attending and voting in person at the Court Meeting.

(4)		No transfer of Company Shares may be effected after 5:00 p.m. on the Books Closure Date.

(5)		Assuming that the Effective Date is 10 December 2009.

(6)		The Scheme will only be effective and binding upon lodgement of the Court Order with ACRA. The Court Order will be lodged with ACRA upon the satisfaction (or, where applicable, waiver) of all the Scheme Conditions and provided neither the Acquiror nor the Company exercises its Termination Right (if any).

CORPORATE INFORMATION


DIRECTORS	:	James A. Norling (Chairman) Chia Song Hwee (President and CEO) Philip Tan Yuen Fah (Chairman of the Audit Committee) Peter Seah Lim Huat (Chairman of the ERCC) Charles E. Thompson Tay Siew Choon Pasquale Pistorio Steven H. Hamblin Maurizio Ghirga

COMPANY SECRETARY	:	Looi Lee Hwa

REGISTERED OFFICE	:	60 Woodlands Industrial Park D Street 2 Singapore 738406

SHAREHOLDERS SERVICES FOR COMPANY SHARES	:	M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906

SHAREHOLDERS SERVICES FOR AMERICAN DEPOSITARY SHARES	:	Citibank, N.A. 250 Royall Street Canton, MA 02021 United States of America

LEGAL ADVISER TO THE SCHEME AS TO SINGAPORE LAW	:	Allen & Gledhill LLP Advocates & Solicitors One Marina Boulevard #28-00 Singapore 018989

LEGAL ADVISER TO THE SCHEME AS TO U.S. LAW	:	Latham & Watkins LLP 9 Raffles Place #42-02 Republic Plaza Singapore 048619

CORPORATE INFORMATION



JOINT FINANCIAL ADVISERS TO THE BOARD	:	Morgan Stanley Asia (Singapore) Pte. 23 Church Street #16-01 Capital Square Singapore 049481

		Citigroup Global Markets Singapore Pte. Ltd. 3 Temasek Avenue #12-00 Centennial Tower Singapore 039190

INDEPENDENT FINANCIAL ADVISER TO THE INDEPENDENT DIRECTORS	:	Deutsche Bank AG, Singapore Branch One Raffles Quay #17-00 South Tower Singapore 048583

AUDITORS	:	KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581

HIGHLIGHTS OF THE ACQUISITION BY WAY OF THE SCHEME

The information in this section is a summary of the terms of the Acquisition by way of the Scheme and is qualified by, and should be read in conjunction with, the full information contained in the rest of this Scheme Document.


Company	Chartered Semiconductor Manufacturing Ltd., a company incorporated in Singapore.

Acquiror	ATIC International Investment Company LLC, a company incorporated in Abu Dhabi and wholly-owned by Advanced Technology Investment Company LLC, which is a technology investment company wholly-owned by the Government of Abu Dhabi.

Scheme	The Acquisition will be effected by way of the Scheme and in accordance with the Code.

Scheme Terms	Under the Scheme, all the Scheme Shares held by Entitled Shareholders will be transferred to the Acquiror (i) fully paid, (ii) free from all Encumbrances and (iii) together with all rights, benefits and entitlements as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date.

Scheme Consideration	S$2.68 in cash for each Scheme Share.

Scheme Shares	The Scheme will be extended, on the same terms and conditions to:

	(i)	all Company Shares, including Company Shares represented by ADSs; and

	(ii)	all new Company Shares unconditionally issued or to be issued on or before the Books Closure Date pursuant to (a) the valid exercise of any Options (b) the vesting of any awards under the RSU Plan, (c) the vesting of any awards under the PSU Plan, (d) the valid conversion of any CRPS into new Company Shares and (e) the valid exercise by GS of the GS Option.

	For the purpose of the Scheme, the expression “Scheme Shares” shall include existing Company Shares and such new Company Shares.

HIGHLIGHTS OF THE ACQUISITION BY WAY OF THE SCHEME



Scheme Conditions		The Scheme is conditional upon the satisfaction (or, where applicable, waiver) of the Scheme Conditions by not later than 5:00 p.m. on 8 March 2010, as may be extended as described in Paragraph 3.1 of the Company’s Letter to Shareholders. Full details of the Scheme Conditions are reproduced in Appendix 5 of this Scheme Document.

Court Meeting		The Scheme has to be approved at the Court Meeting by a majority in number of, and representing not less than 75 per cent. in value of the Company Shares held by, Shareholders present and voting, either in person or by proxy, at the Court Meeting. Voting at the Court Meeting will be by way of poll.

		When the Scheme, with or without modification, becomes effective, it will be binding on all Entitled Shareholders, whether or not they were present in person or by proxy, and whether or not they voted at the Court Meeting, and if they voted, whether or not they voted in favour of the Scheme at the Court Meeting. For the avoidance of doubt, on and from the Effective Date, the Scheme will also be binding on the ADS Custodian Bank and the ADS Depositary in respect of the Company Shares underlying the ADSs, irrespective of how the ADS Holders instructed the ADS Depositary to vote at the Court Meeting.

		Shareholders do not have any specific rights to require an independent appraisal of the value of the Company Shares in connection with the Scheme.

Delisting, Termination of ADS Deposit Agreement and Deregistration with the SEC		Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and (i) subject to the approval of the SGX-ST, the Company will be delisted from the Official List of the SGX-ST and (ii) subject to the filing of a notification with the SEC and prior written notification to Nasdaq, the ADSs will be delisted from Nasdaq. The Company also intends to deregister the Company Shares and ADSs with the SEC and terminate its reporting obligations under the Exchange Act. Notice is hereby given that, conditional upon the Scheme becoming effective, the ADS Deposit Agreement will be terminated as at the Effective Date.

HIGHLIGHTS OF THE ACQUISITION BY WAY OF THE SCHEME



Rationale of the Acquisition	ATIC has made a significant investment in the outsourced semiconductor manufacturing, commonly referred to as “foundry”, industry with the creation of GLOBALFOUNDRIES. GLOBALFOUNDRIES offers its customers leading edge foundry services from its facility in Dresden, Germany and is currently developing a new facility in New York, the United States. The Acquisition would allow ATIC to build on the complementary platforms of the Company and GLOBALFOUNDRIES, utilising the Company’s customer relationships and capabilities in both 8-inch and 12-inch fabrication, and GLOBALFOUNDRIES’ advanced technology expertise, capacity profile and global footprint, and capitalise on the continued growth in the global semiconductor foundry industry.

Financial Evaluation of the Scheme Consideration	The Scheme Consideration represents premiums of: (i) (a) 14.2%, (b) 26.8% and (c) 44.2% to the benchmark prices of the Company Shares on the SGX-ST; and

	(ii)	(a) 15.2%, (b) 28.5% and (c) 56.1% to the benchmark prices of the ADSs on Nasdaq,

	for the periods of (a) 30 trading days, (b) 90 trading days and (c) six months, respectively, up to 4 September 2009, being the latest practicable date prior to the Announcement Date.

STS Irrevocable Undertaking	STS, which held 586,752,688 Company Shares as at the Latest Practicable Date, representing approximately 62.28 per cent. of all the Company Shares, has entered into a letter of undertaking dated 7 September 2009 with the Acquiror and ATIC, pursuant to which it has given an irrevocable undertaking to the Acquiror to, inter alia, (i) vote or procure the voting of all its Company Shares in favour of the Scheme at the Court Meeting, or accept the Offer in respect of all of its Company Shares in the event the Acquiror validly exercises the Switch Option, and (ii) to the extent permitted by applicable laws, vote or procure the voting of all its Company Shares in favour of Special Resolution (1) and Special Resolution (2) at the EGM.

Management Executive Irrevocable Undertakings	Each of Chia Song Hwee (President and CEO of the Company) and George Thomas (Chief Financial Officer of the Company) has entered into a letter of undertaking dated 7 September 2009 with the Acquiror and ATIC, pursuant to which each of them has given an irrevocable undertaking to the Acquiror on terms substantially similar to the STS Irrevocable Undertaking.

HIGHLIGHTS OF THE ACQUISITION BY WAY OF THE SCHEME



Directors’ Intentions		As at the Latest Practicable Date all Directors intend to vote in favour of the Scheme at the Court Meeting in respect of their own beneficial shareholdings.

IFA’s Advice to the Independent Directors in relation to the Scheme		Subject to the qualifications, bases and further advice set out in the IFA’s Letter on the Scheme, the IFA has advised the Independent Directors to recommend that, in the absence of a superior offer, Shareholders should vote in favour of the Scheme at the Court Meeting.

		The summary above should be read in conjunction with, and in the context of, the full text of the advice of the IFA to the Independent Directors on the Scheme as set out in Appendix 2 of this Scheme Document.

Independent Directors’ Recommendation to Shareholders		Subject to the qualifications and bases set out in Paragraph 16 of the Company’s Letter to Shareholders, the Independent Directors consider, from a financial point of view, the terms of the Scheme to be fair and reasonable. The Independent Directors therefore unanimously recommend that, in the absence of a superior offer, Shareholders vote in favour of the Scheme at the Court Meeting.

No Third Party Proposals		No alternative offers for the Company Shares from any third party have been received by the Company, as at the Latest Practicable Date.

LETTER TO SHAREHOLDERS

CHARTERED SEMICONDUCTOR MANUFACTURING LTD.

(Incorporated in the Republic of Singapore)
Company Registration Number: 198703584K


Directors: James A. Norling (Chairman) Chia Song Hwee (President and CEO) Philip Tan Yuen Fah (Chairman of the Audit Committee) Peter Seah Lim Huat (Chairman of the ERCC) Charles E. Thompson Tay Siew Choon Pasquale Pistorio Steven H. Hamblin Maurizio Ghirga		Registered Office: 60 Woodlands Industrial Park D Street 2 Singapore 738406

9 October 2009

To: Shareholders of Chartered Semiconductor Manufacturing Ltd.

Dear Sir/Madam

ACQUISITION OF THE COMPANY BY THE ACQUIROR BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 210 OF THE COMPANIES ACT


1.	INTRODUCTION


1.1	Acquisition. On 7 September 2009, the respective boards of directors of the Company and the Acquiror jointly announced that the Company and the Acquiror had entered into the Implementation Agreement to effect the Acquisition by way of the Scheme. The Acquiror is a company incorporated in Abu Dhabi and wholly-owned by ATIC. ATIC is a technology investment company wholly-owned by the Government of Abu Dhabi.

1.2	Delisting, Termination of ADS Deposit Agreement and Deregistration with the SEC. Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and, (i) subject to the approval of the SGX-ST, the Company will be delisted from the Official List of the SGX-ST and (ii) subject to the filing of a notification with the SEC and prior written notification to Nasdaq, the ADSs will be delisted from Nasdaq. An application has been made to seek confirmation from the SGX-ST to delist the Company from the Official List of the SGX-ST upon the Scheme becoming effective and binding. The Company also intends to deregister the Company Shares and ADSs with the SEC and terminate its reporting obligations under the Exchange Act. Notice is hereby given that, conditional upon the Scheme becoming effective, the ADS Deposit Agreement will be terminated as at the Effective Date.


		The SGX-ST has advised that subject to the effectiveness of the Scheme and the completion of the Acquisition, it has no objection to the delisting of the Company from the Official List of the SGX-ST. The SGX-ST’s confirmation, however, is not an indication of the merits of the delisting of the Company from the Official List of the SGX-ST.

		SHAREHOLDERS AND ADS HOLDERS SHOULD NOTE THAT BY VOTING IN FAVOUR OF THE SCHEME OR INSTRUCTING THE ADS DEPOSITARY TO VOTE IN FAVOUR OF THE

LETTER TO SHAREHOLDERS


		SCHEME, RESPECTIVELY, THE COMPANY WILL BE DELISTED FROM THE SGX-ST AND THE ADSs WILL BE DELISTED FROM NASDAQ IF THE SCHEME BECOMES EFFECTIVE IN ACCORDANCE WITH ITS TERMS. FURTHERMORE, IN SUCH EVENT, THE COMPANY INTENDS TO DEREGISTER THE COMPANY SHARES AND ADSs WITH THE SEC AND TERMINATE ITS REPORTING OBLIGATIONS UNDER THE EXCHANGE ACT. NOTICE IS HEREBY GIVEN THAT, CONDITIONAL UPON THE SCHEME BECOMING EFFECTIVE, THE ADS DEPOSIT AGREEMENT WILL BE TERMINATED AS AT THE EFFECTIVE DATE.


1.3	Purpose. The purpose of this Scheme Document is to set out information pertaining to the Scheme, to seek your approval of the Scheme and to give you notice of the Court Meeting.

1.4	Explanatory Statement. An Explanatory Statement setting out the key terms of, the rationale of, and the effects of the Scheme, the material interests of the Directors and the procedures for the implementation of the Scheme is set out on pages 51 to 67 of this Scheme Document. It should be read in conjunction with the full text of this Scheme Document.

1.5	Third Party Proposals. From the Announcement Date up to the Latest Practicable Date, no alternative offers for the Company Shares from any third party have been received by the Company.


2.	THE SCHEME


2.1	Terms.


	2.1.1	The Acquisition will be effected by way of the Scheme and in accordance with the Code.

	2.1.2	Under the Scheme:


	(i)	all the Scheme Shares held by Entitled Shareholders will be transferred to the Acquiror:


	(a)	fully paid;

	(b)	free from all Encumbrances; and

	(c)	together with all rights, benefits and entitlements as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date; and


	(ii)	in consideration for such transfer, and upon and subject to the Scheme becoming effective, each Entitled Shareholder will be entitled to receive from the Acquiror the Scheme Consideration, being S$2.68 in cash for each Scheme Share, provided that if any dividend or distribution with respect to the Company Shares is declared or announced on or after the Announcement Date, and such dividend or distribution is paid or made to holders of the Company Shares of record as at any date that is on or prior to the Effective Date, the Scheme Consideration shall be reduced by the amount of such dividend or distribution.


	2.1.3	ADS Holders will be entitled to receive their consideration from the ADS Depositary in accordance with the terms of the ADS Deposit Agreement. Based on the prevailing

LETTER TO SHAREHOLDERS


		exchange rate from Bloomberg L.P. on the Latest Practicable Date, of S$1.4138 to US$1, the equivalent amount of consideration for each ADS is approximately US$18.96, less the applicable ADS Depositary’s fees, taxes and expenses. The actual amount per ADS that ADS Holders will receive will depend on the applicable prevailing exchange rate at the time of conversion by the ADS Depositary of the Scheme Consideration from Singapore Dollars to United States Dollars and the amount of applicable ADS Depositary’s fees, taxes and expenses.


2.2	Scheme Consideration. The Scheme Consideration was arrived at after arm’s length negotiations between the Company and the Acquiror, on a willing-seller, willing-buyer basis, after taking into consideration, amongst other things, the recent market price of the Company Shares.

The full text of the advice of the IFA to the Independent Directors on the Scheme is set out in Appendix 2 of this Scheme Document.


2.3	Scheme Shares. The Scheme will be extended, on the same terms and conditions to:


	2.3.1	all Company Shares, including Company Shares represented by ADSs; and

	2.3.2	all new Company Shares unconditionally issued or to be issued on or before the Books Closure Date pursuant to (i) the valid exercise of any Options, (ii) the vesting of any awards under the RSU Plan, (iii) the vesting of any awards under the PSU Plan, (iv) the valid conversion of any CRPS into new Company Shares and (v) the valid exercise by GS of the GS Option.

For the purpose of the Scheme, the expression “Scheme Shares” shall include all existing Company Shares and such new Company Shares.


2.4	Waiver of Rights to a General Offer. Shareholders and ADS Holders should note that by voting in favour of the Scheme or instructing the ADS Depositary to vote in favour of the Scheme, respectively, they are agreeing to the Acquiror and the parties acting in concert with it acquiring effective control of the Company without having to make a general offer for the Company.


2.5	No Cash Outlay. Shareholders should note that no cash outlay (including any stamp duties or brokerage expenses) will be required from Shareholders under the Scheme.


3.	PRINCIPAL TERMS OF THE IMPLEMENTATION AGREEMENT

3.1

Scheme Conditions. The Scheme is conditional upon the satisfaction (or, where applicable, waiver) of the Scheme Conditions by not later than 5:00 p.m. on (i) 8 March 2010 or (ii) if Cash is to be tested as at the 4th Test Date (pursuant to, and as such terms are defined in Paragraph (m) of Appendix 5 of this Scheme Document), 11 March 2010, in each case, as may be extended as described in paragraph 3.5.4 of this Letter to Shareholders or such other date as the Parties may agree.

Full details of the Scheme Conditions are reproduced in Appendix 5 of this Scheme Document.


3.2	Non-Satisfaction of Scheme Conditions. The Scheme will only become effective and binding if all the Scheme Conditions have been satisfied (or, where applicable, waived) and provided neither the Company nor the Acquiror exercises its Termination Right (if any). Shareholders should note that if any of the Scheme Conditions are not satisfied (or, where applicable, waived) or if the

LETTER TO SHAREHOLDERS


	Scheme has not become effective on or before 5:00 p.m. on the Long-Stop Date or such other date as the Parties may agree, either the Company or the Acquiror, as the case may be, may terminate the Implementation Agreement (save for the surviving provisions) by notice in writing to the other Party.


	3.2.1	Acquiror’s Benefit: The Acquiror alone may waive the Scheme Conditions in Paragraphs (b)(ii), (h)(i), (j), (l), (m) and (n) of Appendix 5 of this Scheme Document. Any breach or non-fulfilment of any such Scheme Conditions may be relied upon only by the Acquiror. The Acquiror may at any time and from time to time at its sole and absolute discretion waive any such breach or non-fulfilment.

	3.2.2	The Company’s Benefit: The Company alone may waive the Scheme Conditions in Paragraphs (b)(i), (h)(ii), and (k) of Appendix 5 of this Scheme Document. Any breach or non-fulfilment of any such Scheme Conditions may be relied upon only by the Company. The Company may at any time and from time to time at its sole and absolute discretion waive any such breach or non-fulfilment.

	3.2.3	Mutual Benefit: The Parties together may jointly waive the Scheme Conditions in Paragraphs (f) and (g) of Appendix 5 of this Scheme Document (each, to the extent legally permissible) and Paragraph (i) of Appendix 5 of this Scheme Document (but only to the extent that both Parties are not in default, otherwise the Scheme Condition in Paragraph (i) of Appendix 5 of this Scheme Document shall be for the benefit of the Party not in default).

	3.2.4	Other Conditions: For the avoidance of doubt, the Parties agree that the Scheme Conditions in Paragraphs (a), (c), (d) and (e) of Appendix 5 of this Scheme Document are not capable of being waived by either or both Parties.


3.3	Termination Right. The Implementation Agreement may be terminated by either Party at any time on or prior to the Record Date (provided that the Party seeking termination does so only after it has had prior consultation with the SIC), and on the following grounds (each, a “Termination Right”):


	3.3.1	Mutual Consent: by the mutual written consent of the Parties;

	3.3.2	Court Order: by either Party, if any court of competent jurisdiction or Governmental Authority has issued an injunction, order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting or preventing the consummation of the Acquisition or the implementation of the Scheme (or the proposed transactions relating to the Scheme), and such order, decree, ruling, other action or refusal shall have become final and non-appealable;

	3.3.3	Breach: either:


	(i)	by the Acquiror, if the Company is in material breach of any provision of the Implementation Agreement (other than a provision which is qualified by a materiality test, in which case any breach shall suffice) or has failed to perform and comply in all material respects with any Scheme Conditions which are expressed to be for the benefit of the Acquiror, and has failed to cure such breach after reasonable notice of such breach (specifying, to the extent reasonably practicable, the nature and circumstances of the breach) has been given, on or prior to the Record Date; or

LETTER TO SHAREHOLDERS


	(ii)	by the Company, if the Acquiror is in material breach of any provision of the Implementation Agreement (other than a provision which is qualified by a materiality test, in which case any breach shall suffice) or has failed to perform and comply in all material respects with any Scheme Conditions which are expressed to be for the benefit of the Company and has failed to cure such breach after reasonable notice of such breach (specifying, to the extent reasonably practicable, the nature and circumstances of the breach) has been given, on or prior to the Record Date,

provided that either the Company or the Acquiror, as the case may be, has given written notice to the other Party of its intention to terminate the Implementation Agreement. In this circumstance, the Implementation Agreement shall be terminated on the date falling five Business Days after the date of such notice of termination;


	3.3.4	Shareholders’ Approvals: by either Party, if the resolutions submitted to the Court Meeting are not approved (without amendment) by the requisite majorities of Shareholders;

	3.3.5	Competing Offer: by either Party, if a Competing Offer under Rule 14 or 15 of the Code becomes or is declared unconditional in all respects or becomes effective, as the case may be; or

	3.3.6	SIC Competitive Procedure: by either Party, in the event that, following the conclusion of the SIC Competitive Procedure, the latest bid submitted by the Acquiror pursuant to such SIC Competitive Procedure is lower than the latest bid submitted by other competing offeror(s) pursuant to the SIC Competitive Procedure.

3.4

Consultation with the SIC. Any Party seeking to terminate the Implementation Agreement by exercising the Termination Right or invoking the non-satisfaction of any of the Scheme Conditions as set out in Paragraphs (b) and (f) to (n) of Appendix 5 of this Scheme Document to terminate the Implementation Agreement must first consult with the SIC and obtain the SIC’s approval of, or a statement that the SIC has no objections to, such termination.


3.5	Matching Right for Superior Offer.


	3.5.1	Matching Right and Matching Right Notification: The Parties have agreed that in the event that the Independent Directors, in the exercise of their fiduciary obligations, decide to recommend or announce their intention to recommend a Competing Offer which they determine in good faith and in their sole discretion, following receipt of advice from their financial and legal advisers, to be superior to the terms offered by the Acquiror (the “Superior Offer”), the Company will promptly (and in any event, prior to the recommendation of or announcement of intention to recommend the Superior Offer) notify the Acquiror of such determination (the “Matching Right Notification”), and give the Acquiror the right at its discretion to match the Superior Offer (the “Matching Right”).

	3.5.2	Matching Right Period: From the date of the Matching Right Notification, the Acquiror is entitled to match the Superior Offer during the applicable period set out below (the “Matching Right Period”):


	(i)	in the event the Switch Option is not or has not been validly exercised, (a) for a period as specified in the Matching Right Notification of not less than 10 Business

LETTER TO SHAREHOLDERS


		Days in Abu Dhabi (in relation to the first exercise by the Acquiror of the Matching Right), and (b) for a period as specified in the Matching Right Notification of not less than three Business Days in Abu Dhabi (in relation to any subsequent exercise by the Acquiror of the Matching Right); or


	(ii)	in the event the Switch Option is or has been validly exercised, for (a) a period of not less than three Business Days in Abu Dhabi; or (b) for such lesser period as is necessary to enable the Company to comply with its obligations under Rule 22.2 of the Code.


	3.5.3	Matching Offer Determination: In the event that the Acquiror exercises the Matching Right, the Independent Directors shall determine, in good faith and in their sole discretion, following receipt of advice of their financial and legal advisers, whether the Acquiror has matched the Superior Offer, and shall notify the Acquiror of such determination in writing (the “Matching Offer Determination”).

If the Independent Directors do not issue the Matching Offer Determination upon (a) the expiration of five Business Days in Singapore after the Acquiror has validly exercised the Matching Right (in relation to the first exercise by the Acquiror of the Matching Right); and (b) the expiration of two Business Days in Singapore after the Acquiror has validly exercised the Matching Right (in relation to any subsequent exercise by the Acquiror of the Matching Right), the Independent Directors shall be deemed to have issued a Matching Offer Determination stating that the Acquiror has matched the Superior Offer for the purpose of allowing the Acquiror to exercise the Switch Option only, provided the Acquiror states, in the exercise of its Matching Right, that it intends to exercise the Switch Option.


	3.5.4	Delay, Postponement or Adjournment: In the event the Scheme Document has not been despatched prior to the commencement of the applicable Matching Right Period or the establishment of the SIC Competitive Procedure, as the case may be, the Company shall be entitled to delay or postpone such despatch, until after (i) the expiration of the applicable Matching Right Period, if the Matching Right is not validly exercised, or the Independent Directors having delivered to the Acquiror the Matching Offer Determination, if the Matching Right is validly exercised or (ii) the completion of the SIC Competitive Procedure, as the case may be.

In the event the Scheme Document has been despatched prior to or on the commencement of the applicable Matching Right Period or the establishment of the SIC Competitive Procedure, as the case may be, the Company shall have the right to adjourn the Court Meeting after taking legal and financial advice that not to do so would be a breach of the fiduciary duties of the Company Directors or the Company’s obligations under Applicable Laws (including the Code).

However, the maximum delay, postponement or adjournment permitted as described above shall not exceed 16 Business Days in Abu Dhabi and Singapore in the aggregate, and the Long-Stop Date shall be correspondingly extended by the same number of Business Days in Abu Dhabi and Singapore as such delay, postponement or adjournment.

LETTER TO SHAREHOLDERS


3.6	Switch Option.


	3.6.1	Switch Option: Subject to prior consultation with the SIC, the Acquiror shall have the right at its discretion to elect to proceed by way of an Offer in lieu of proceeding with the Acquisition by way of the Scheme (the “Switch Option”), if:


	(i)	any person (other than the Acquiror or any of the parties acting in concert with it) publicly announces a Superior Offer (whether on a firm intention or a pre-conditional basis) for no less than 30 per cent. of the voting rights of the Company;

	(ii)	the Acquiror validly exercises the Matching Right, and receives or is deemed to have received the Matching Offer Determination stating that it has matched the Superior Offer; and

	(iii)	the Acquiror duly announces its firm intention to make the Offer.


	3.6.2	Terms of the Offer: If the Acquiror validly exercises the Switch Option, the Acquiror shall make the Offer on the same or better terms as those set out in the Acquiror’s proposal to the Company when exercising the Matching Right. The acceptance condition of such Offer may be set at only more than 50 per cent. of the Company Shares (including Company Shares held in the form of ADSs), and not conditional on higher level acceptances.

	3.6.3	Termination of Implementation Agreement: If the Acquiror validly exercises the Switch Option, the Implementation Agreement shall terminate with effect from the date of announcement by the Acquiror of its firm intention to make the Offer, save for certain surviving provisions and the provisions relating to the Matching Right and to non-solicitation, as described in Paragraphs 3.5 and 3.7 of this Letter to Shareholders, respectively.


3.7	Non-Solicitation.


	3.7.1	No-Shop: During the No-Shop Period, the Company shall, inter alia, (i) deal exclusively with the Acquiror to complete the Scheme and (ii) not, and shall not permit any of its Group Companies or their respective employees, officers and advisers to (whether directly or indirectly) solicit, encourage, initiate or participate in any offer, proposal, expression of interest or make any initial or further approach to any person, or entertain any approach from or enter into or continue negotiations or discussions with any person (other than the Acquiror or any of the parties acting in concert with it), or communicate any intention to do any of these things, with respect to any Competing Offer, provided that such restriction shall not apply to the making of normal presentations by or on behalf of the Company, to brokers, investors or analysts in the ordinary and usual course of the Company’s business generally, and shall not restrict the provision of information by or on behalf of the Company to the SGX-ST or SEC via a report on Form 6-K.

	3.7.2	Unsolicited Offer: Neither the Company nor the Company Directors are prohibited or restricted, during the No-Shop Period, from receiving a bona fide unsolicited or uninitiated offer or proposal with respect to any Competing Offer (an “Unsolicited Offer”). In the event that any of the Company, the Group Companies, or their respective directors, employees, officers or advisers receives any Unsolicited Offer, the Company and/or the

LETTER TO SHAREHOLDERS


		Company Directors shall be entitled, subject to the obligations described in Paragraph 3.5 of this Letter to Shareholders, to, inter alia:


	(i)	announce such Unsolicited Offer, insofar as such announcement is required under the Listing Manual, the Code, the Nasdaq Listing Rules or any Applicable Laws;

	(ii)	comply with Rule 9.2 of the Code;

	(iii)	enter into negotiations, discussions or otherwise entertain such Unsolicited Offer if necessary for the Company Directors to comply with and discharge their fiduciary duties to the Company and the Shareholders; and

	(iv)	in the exercise of the fiduciary duties of the Company Directors, make or refrain from making any recommendation to the Shareholders as the Company Directors may deem fit in respect of the Unsolicited Offer.


	3.7.3	Notice: During the No-Shop Period, if the Company (i) is informed of or otherwise becomes aware of (a) an Unsolicited Offer, (b) any approach, solicitation or attempt to initiate any negotiations, correspondence or discussions, or (c) any other proposal that the Company reasonably believes could lead to a Competing Offer or (ii) enters into any discussions relating to the same, the Company will notify the Acquiror immediately in writing. Unless the Company is subject to a binding confidentiality agreement in effect prior to the date of the exclusivity agreement entered into with ATIC, the Company will disclose to the Acquiror all material terms of such proposal including the identity of the other parties and any price or price range. If the Company is bound by a confidentiality agreement, the Company will disclose to the Acquiror only information that the Company is permitted to disclose under such confidentiality agreement.


3.8	Certain Restrictions.


	3.8.1	During the First Restricted Period, the Acquiror shall not, and shall procure that the Acquiror Affiliates and the Restricted Affiliates shall not, unless pursuant to the terms of the Implementation Agreement or with the Company’s prior written consent:


	(i)	acquire any Company Shares or Company Convertible Securities, whether or not such Company Convertible Securities may be settled in cash or otherwise and whether at the discretion of the Acquiror or any of the Acquiror Affiliates or the Restricted Affiliates;

	(ii)	make an offer for the Company Shares or Company Convertible Securities or announce or take any action which would require the announcement of any similar transaction involving the Company Shares or the Company Convertible Securities; or

	(iii)	enter into any agreement, arrangement or understanding (whether conditionally, and whether legally binding or not) with any person in relation to any of the foregoing, or assist, advise or encourage any person to achieve any of the foregoing,

LETTER TO SHAREHOLDERS

save that, subject to Applicable Laws, nothing described in this Paragraph 3.8.1 shall prohibit the Acquiror and the Acquiror Affiliates (but not the Restricted Affiliates) from acquiring:


	(a)	any CRPS or any Company Shares or Company Convertible Securities after the Switch Option is validly exercised; or

	(b)	any Company Shares in aggregate representing less than 10 per cent. of the voting rights of the Company from time to time subject to compliance with the provisions described in Paragraph 3.8.2 of this Letter to Shareholders; and


	3.8.2	during the First Restricted Period and during the Second Restricted Period, the Acquiror shall and shall procure that each of the Acquiror Affiliates (and each of the Restricted Affiliates for so long as such Restricted Affiliate is a party acting in concert with the Acquiror Affiliates) shall:


	(i)	in respect of all and not some only of the Company Shares held by it, vote in favour of any resolution (including an ordinary, a special or a scheme resolution) of the Company which is recommended by a majority of the Company Directors and shall not otherwise vote any such Company Shares;

	(ii)	in respect of all and not some only of the Company Shares held by it, accept any tender offer, general offer or partial offer which is recommended by a majority of the Company Directors;

	(iii)	not convene, requisition or join in requisitioning, any general meeting of the Company;

	(iv)	not propose any nominee for appointment to the Board (whether by way of an ordinary resolution or otherwise);

	(v)	not seek to control or influence the business strategy or management of the business of the Group; or

	(vi)	not enter into any agreement, arrangement or understanding (conditionally or otherwise and whether legally binding or not) with any person in relation to the foregoing or assist, advise or encourage any person to achieve any of the foregoing.

For the avoidance of doubt, the provisions described in Paragraphs 3.8.1 and 3.8.2 of this Letter to Shareholders shall not apply (a) following the effectiveness of the Scheme or, if the Switch Option is validly exercised, following the date the Offer becomes or is declared unconditional in all respects and (b) if no Company Shares or Company Convertible Securities are bought by the Acquiror or any of the Acquiror Affiliates or the Restricted Affiliates during the First Restricted Period.

LETTER TO SHAREHOLDERS


3.9	Fee. The Company shall pay the Acquiror a sum equal to S$25,375,176.64 (the “Fee”) in the following events, provided that the Company shall not be obliged to pay any amount which the SIC determines would not be permitted by Rule 13 of the Code:


	3.9.1	Recommendation of Competing Offer: if a Competing Offer or an intention to make a Competing Offer is announced by a third party (whether or not such Competing Offer is pre-conditional), and:


	(i)	the Independent Directors recommend or announce their intention to recommend such Competing Offer over the Scheme or do not unequivocally recommend that Shareholders vote in favour of the Scheme; or

	(ii)	in the event that prior to the announcement of the Competing Offer or the intention to make a Competing Offer, the Independent Directors, having recommended that Shareholders vote in favour of the Scheme, withdraw such recommendation or announce their intention to withdraw such recommendation and subsequently, recommend or announce their intention to recommend such Competing Offer or do not unequivocally recommend that Shareholders vote in favour of the Scheme,

and Shareholders’ approval of the Scheme is not obtained;


	3.9.2	Breach of Material Obligations: if the Company breaches any of its Material Obligations:


	(i)	prior to the date of the Court Meeting, and Shareholders’ approval of the Scheme is not obtained; or

	(ii)	after Shareholders’ approval of the Scheme is obtained and the Scheme does not become effective by the Long-Stop Date or such other date as the Parties may agree, due to any of the Scheme Conditions in Paragraphs (d) and (e) of Appendix 5 of this Scheme Document not being fulfilled other than as a result of the Company exercising its right to terminate the Implementation Agreement on the grounds described in Paragraph 3.3.3(ii) of this Letter to Shareholders; or


	3.9.3	Entertainment of Unsolicited Offer: if the Company exercises its right to enter into negotiations or discussions or otherwise entertains an Unsolicited Offer if necessary for the Company Directors to comply with and discharge their fiduciary duties, and Shareholders’ approval of the Scheme is not obtained.

The maximum amount payable by the Company in relation to the foregoing events shall not exceed an amount equal to the Fee.

3.10

Acceleration of RSUs and PSUs. Pursuant to the terms of the Implementation Agreement, the Company shall accelerate all outstanding RSUs and PSUs granted under the RSU Plan and the PSU Plan, respectively, as at the Announcement Date, on and subject to the effectiveness of the Scheme or if the Switch Option is exercised, on the Offer becoming or being declared unconditional in all respects. The Acquiror has undertaken to pay the Company a sum in cash equal to the Scheme Consideration multiplied by the aggregate number of Company Shares comprised in such accelerated RSUs and PSUs (collectively, the “Accelerated Amount”) (less

LETTER TO SHAREHOLDERS


	any applicable withholding tax amount) not later than five Business Days prior to the dates on which such payments are due to the grantees as described below provided that:


	3.10.1	the aggregate number of Company Shares comprised in the accelerated RSUs under the RSU Plan shall not exceed 3,791,945; and

	3.10.2	the aggregate number of Company Shares comprised in the accelerated PSUs under the PSU Plan shall not exceed 979,754.

Upon receipt of the Accelerated Amount, the Company shall pay an amount in cash equal to the Accelerated Amount (less any applicable withholding tax amount) to the relevant grantees (in the relevant amounts) within five Business Days after the Effective Date or after the date the Offer becomes or is declared unconditional in all respects, as the case may be, subject to the relevant grantees continuing to be employed by a Group Company at the Effective Date or the date the Offer becomes or is declared unconditional in all respects, as the case may be.


4.	THE PREFERENCE SHARE OFFER

The Company understands that the Acquiror will make the Preference Share Offer to Preference Share Holders to purchase all the CRPS held by the Preference Share Holders for an amount in United States Dollars for each CRPS equal to the Early Redemption Price to be determined by reference to the Effective Date as the date of determination (the “Preference Share Offer Price”). The Company further understands that, by accepting the Preference Share Offer, each accepting Preference Share Holder will also consent, pursuant to Article 4A.21(3) of the Articles, to the amendment of Article 4A of the Articles in the manner described in Paragraph 19.3 of this Letter to Shareholders.


5.	THE GS OPTION

As at the Latest Practicable Date, under the GS Option, GS has a call option to subscribe for 32,388,322 Company Shares at an exercise price of US$9.338 per Company Share until 29 March 2011. Conversely, the Company has an option (a “soft call option”) to terminate the call option early at US$11.672 per Company Share, exercisable subject to certain conditions being met.

Under the terms of the GS Option, the effect of the Acquisition is that both the call option and the soft call option will be cancelled with effect from the Effective Date. In connection with such cancellation, a net amount (“Cancellation Amount”) determined by reference to the value of the call option and the soft call option will be payable from the Company to GS.

The Cancellation Amount is to be agreed by the Company and GS but, failing agreement, will be determined by GS as calculation agent.

In connection with the Acquisition, no proposal or offer to purchase the call option, including a proposal to purchase such option at its “see-through” price, is required to be made. Under the terms of the Implementation Agreement, the Company has undertaken with the Acquiror that it will not agree to any Cancellation Amount in respect of the GS Option without the Acquiror’s approval. Additionally, neither the Company nor the Acquiror will make, or agree to, a proposal relating to any Cancellation Amount in respect of the GS Option without having first consulted the SIC in relation thereto.

LETTER TO SHAREHOLDERS


6.	IRREVOCABLE UNDERTAKINGS


6.1	STS Irrevocable Undertaking. STS, which holds 586,752,688 Company Shares as at the Latest Practicable Date, representing approximately 62.28 per cent. of all the Company Shares, has entered into the STS Irrevocable Undertaking, pursuant to which it has given an irrevocable undertaking to the Acquiror to, inter alia:


	6.1.1	Vote in Favour of the Scheme at the Court Meeting: vote or procure the voting of all its Company Shares (i) in favour of the Scheme at the Court Meeting and (ii) against any resolution or proposal to adjourn the Court Meeting, except in the event the Company seeks an adjournment of the Court Meeting for any reason described in Paragraph 3.5.4 of this Letter to Shareholders or with the prior written consent of the Acquiror;

	6.1.2	Accept the Offer: in the event the Acquiror validly exercises the Switch Option, (i) accept the Offer in respect of all its Company Shares not later than five business days after the despatch by or on behalf of the Acquiror of the formal document in relation to the Offer and (ii) not withdraw its acceptance of the Offer, without the prior written consent of the Acquiror; and


	6.1.3	Vote in Favour of Special Resolution (1) and Special Resolution (2) at the EGM: to the extent permitted by applicable laws, vote or procure the voting of all its Company Shares (i) in favour of Special Resolution (1) and Special Resolution (2) at the EGM, and (ii) against any resolution or proposal to adjourn the EGM, except in the event the Company seeks an adjournment of the EGM where the Company seeks an adjournment of the Court Meeting for any reason described in Paragraph 3.5.4 of this Letter to Shareholders or with the prior written consent of the Acquiror.

The STS Irrevocable Undertaking will continue to be binding on STS even if the Acquiror does not exercise the Switch Option in the event of a Superior Offer.

Further, STS has agreed to be bound by certain non-solicitation provisions during the term of the STS Irrevocable Undertaking, save for certain exceptions.


6.2	Management Executive Irrevocable Undertakings. Each of Chia Song Hwee (President and CEO of the Company) and George Thomas (the Chief Financial Officer of the Company) has entered into the Management Executive Irrevocable Undertaking pursuant to which each of them has given an irrevocable undertaking to the Acquiror on terms substantially similar to the STS Irrevocable Undertaking.

As at the Latest Practicable Date, Chia Song Hwee holds 188,000 Company Shares, representing approximately 0.02 per cent. of all the Company Shares, and George Thomas holds 52,086 Company Shares, representing approximately 0.01 per cent. of all the Company Shares.


6.3	Termination. The Irrevocable Undertakings will each terminate on the earliest of the following dates:


	6.3.1	the Long-Stop Date, or such other date as the Acquiror and the party giving the relevant Irrevocable Undertaking may agree in writing, if the Scheme lapses, is withdrawn or does not become effective by such time for any reason other than a breach by such party of its obligations under the relevant Irrevocable Undertaking;

LETTER TO SHAREHOLDERS


	6.3.2	the date an Offer is made, in the event the Acquiror makes such Offer in lieu of proceeding with the Scheme and such Offer is not made in compliance with the valid exercise of the Switch Option;

	6.3.3	the date the Scheme lapses, is withdrawn or does not become effective for any reason other than a breach by the party giving the relevant Irrevocable Undertaking of its obligations under the relevant Irrevocable Undertaking; and

	6.3.4	the date the Scheme becomes effective in accordance with its terms,

provided that where an Offer is made pursuant to and in compliance with a valid exercise of the Switch Option, then, the Irrevocable Undertakings will terminate on the earlier of (i) the completion of the Offer by the transfer of the Company Shares to the Acquiror or as it may direct subsequent to the Offer becoming unconditional or (ii) four months after the Long-Stop Date.


6.4	No Other Irrevocable Undertakings. Save for the Irrevocable Undertakings, the Company understands from the Acquiror that none of the Acquiror, ATIC and any party acting in concert with them has received any other irrevocable undertakings from any other party to vote in favour of, or reject, the Scheme as at the Latest Practicable Date.


7.	INFORMATION ON THE COMPANY

The Company was incorporated in Singapore on 16 November 1987. The Company Shares were listed on the Main Board of the SGX-ST on 1 November 1999 and the ADSs were listed on Nasdaq on 29 October 1999. The Company is one of the world’s leading dedicated semiconductor foundries. The Group provides comprehensive wafer fabrication services and technologies to semiconductor suppliers and systems companies and is focused on providing foundry services to customers that serve high-growth, technologically advanced applications for the communications, consumer and computer sectors.

The Group currently owns, or has an interest in, six fabrication facilities - Fabs 2, 3, 3E, 5, 6 and 7, all of which are located in Singapore. In addition, the Group has service operations in nine locations in seven countries throughout North America, Europe and Asia.

Further, as at the Latest Practicable Date, the Company had (i) in issue 942,060,579 Company Shares and 28,350 CRPS, convertible into 68,810,679 Company Shares at the prevailing US$4.12 conversion price, (ii) 14,479,461 Company Shares comprised in outstanding Options, (iii) 3,791,383 Company Shares comprised in outstanding RSUs, (iv) 979,754 Company Shares comprised in outstanding PSUs and (v) 32,388,322 Company Shares comprised in the GS Option.

Further information relating to the Company is set out in Appendix 4 of this Scheme Document.


8.	INFORMATION ON THE ACQUIROR AND ATIC

Information on the Acquiror and ATIC are set out in Schedule A of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document and are reproduced in italics below:

“ATIC was established in Abu Dhabi on 28 September 2008. A technology investment company wholly-owned by the Government of Abu Dhabi, ATIC is focused on making significant investments in the advanced technology sector, both in Abu Dhabi and internationally. ATIC’s mandate is to generate returns that deliver long-term economic and social benefits to Abu Dhabi.

LETTER TO SHAREHOLDERS

The Acquiror is a special purpose vehicle incorporated in Abu Dhabi on 2 September 2009 for the purpose of the Acquisition. The Acquiror is a wholly-owned subsidiary of ATIC.”


9.	RATIONALE AND BENEFITS OF THE ACQUISITION AND FUTURE PLANS FOR THE GROUP


9.1	Rationale and Benefits of the Acquisition. The Acquiror’s rationale and benefits of the Acquisition are set out in Paragraph 4.1 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document and are reproduced in italics below:

“ATIC has made a significant investment in the outsourced semiconductor manufacturing, commonly referred to as “foundry”, industry with the creation of GLOBALFOUNDRIES. GLOBALFOUNDRIES offers its customers leading edge foundry services from its facility in Dresden, Germany and is currently developing a new facility in New York, the United States. The Acquisition would allow ATIC to build on the complementary platforms of the Company and GLOBALFOUNDRIES, utilising the Company’s customer relationships and capabilities in both 8-inch and 12-inch fabrication, and GLOBALFOUNDRIES’ advanced technology expertise, capacity profile and global footprint, and capitalise on the continued growth in the global semiconductor foundry industry.”


9.2	Future Plans for the Group. The Acquiror’s future plans for the Group are set out in Paragraph 4.2 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document and are reproduced in italics below:

“Following the completion of the Acquisition, ATIC will work with the management teams of the Company and GLOBALFOUNDRIES to integrate the operations and management of the Company and GLOBALFOUNDRIES to achieve operational and financial synergies.

The Company, together with ATIC, is seeking waivers from certain of the Company’s lenders (i) of change of control clauses, to enable certain loan facilities to remain available to the Company following completion of the Acquisition and (ii) of certain other covenants, to facilitate the operational combination of the Company and GLOBALFOUNDRIES. The waivers are conditional on completion of the Acquisition.

Certain senior employees of GLOBALFOUNDRIES currently participate in GLOBALFOUNDRIES’ Long Term Incentive Plan pursuant to which they are eligible to receive annual cash settled awards if, depending on the type of award, certain performance criteria are met or there is an increase in the share price of GLOBALFOUNDRIES. Following the completion of the Acquisition, it is envisaged that certain senior executives of the Company will be eligible to participate in GLOBALFOUNDRIES’ Long Term Incentive Plan.

Save as set out above, ATIC has no current intention of (i) making material changes to the existing businesses of the Company; (ii) redeploying fixed assets of the Company; or (iii) discontinuing the employment of the existing employees of the Company or its subsidiaries. However, the Acquiror Directors retain the flexibility at any time to consider any options or opportunities in relation to the Group which may present themselves and which they may regard to be in the interest of the Acquiror. ”

LETTER TO SHAREHOLDERS


10.	FINANCIAL EVALUATION OF THE SCHEME CONSIDERATION


10.1	Scheme Consideration. The Scheme Consideration represents a premium/(discount) over the recent market prices of the Company Shares and the ADSs. Specifically, the Scheme Consideration represents the following premium/(discounts):


								Premium/
		Benchmark		Premium/				(Discount to)
		price of the		(Discount to) the				the
		Company		benchmark price		Benchmark price		benchmark
		Shares on the		of the Company		of the ADSs on		price of the
		SGX-ST⁽¹⁾		Shares on the		Nasdaq⁽¹⁾⁽²⁾		ADSs on
		(S$)		SGX-ST (%)		(US$)		Nasdaq (%)

(i)	Last transacted price as quoted on 28 May 2009⁽³⁾		2.18		22.9		14.81		25.9
(ii)	Last transacted price as quoted on 4 September 2009, being the latest practicable date prior to the Announcement Date		2.66		0.8		18.78		(0.7	)
(iii)	VWAP for the period of five trading days up to the latest practicable date prior to the Announcement Date		2.53		5.9		17.57		6.1
(iv)	VWAP for the period of 30 trading days up to the latest practicable date prior to the Announcement Date		2.35		14.2		16.19		15.2
(v)	VWAP for the period of 90 trading days up to the latest practicable date prior to the Announcement Date		2.11		26.8		14.50		28.5
(vi)	VWAP for the period of six months up to the latest practicable date prior to the Announcement Date		1.86		44.2		11.94		56.1

Note:


(1)		The figures set out in this Paragraph 10.1 are based on data extracted from Bloomberg L.P. and are adjusted (where applicable, retroactively) for the Company’s 27-for-10 rights offering completed on 15 April 2009 and 10-for-1 share consolidation effective on 21 May 2009.

(2)		One ADS represents the right to receive 10 Company Shares on deposit with the ADS Custodian Bank.

(3)		On 29 May 2009, the Singapore Business Times reported on a possible acquisition by ATIC of the Company Shares held by STS which was followed by a holding announcement by the Company on the same day. 28 May 2009 is therefore the trading day immediately prior to the commencement of market speculation.


11.	APPROVALS REQUIRED


11.1	Approvals. The Scheme will require, inter alia, the following approvals:


	11.1.1	the approval of the Scheme by a majority in number of, and representing not less than 75 per cent. in value of the Company Shares held by, Shareholders present and voting, either in person or by proxy, at the Court Meeting; and

	11.1.2	the approval of the Scheme by the Court.

Voting at the Court Meeting will be by way of poll. In addition, the Scheme will only come into effect if all the Scheme Conditions have been satisfied (or, where applicable, waived) in accordance with the terms of the Implementation Agreement and provided neither the Acquiror nor the Company

LETTER TO SHAREHOLDERS

exercises its Termination Right (if any) and a copy of the order of the Court has been lodged with the ACRA. Upon the Scheme becoming effective, it will be binding on all Entitled Shareholders, whether or not they attended or voted at the Court Meeting, and if they voted, whether or not they voted in favour of the Scheme. Shareholders do not have any specific rights to require an independent appraisal of the value of the Company Shares in connection with the Scheme. Although ADS Holders will not be entitled to attend the Court Meeting, they will be given the opportunity to instruct the ADS Depositary as to how to vote the Company Shares underlying their ADSs. For the avoidance of doubt, upon the Scheme becoming effective, the Scheme will also be binding in respect of the Company Shares underlying the ADSs, irrespective of how ADS Holders instructed the ADS Depositary to vote at the Court Meeting.


11.2	Exemptions. In relation to the Code, the SIC has confirmed that the Scheme is exempted from Rules 14, 15, 16, 17, 20.1, 21, 22, 28, 29 and 33.2 and Note 1(b) on Rule 19 of the Code, subject to the following conditions:


	11.2.1	the common substantial shareholders of the Company and the Acquiror abstain from voting on the Scheme;

	11.2.2	the Acquiror and parties acting in concert with it abstain from voting on the Scheme;

	11.2.3	the Company Directors who are also Acquiror Directors abstain from making a recommendation on the Scheme to the Shareholders; and

	11.2.4	the Company appoints an independent financial adviser to advise Shareholders on the Scheme.


12.	DISCLOSURES


12.1	Shareholdings and Dealings. Disclosures in relation to shareholdings and dealings in (i) Company Shares or Company Convertible Securities, (ii) Acquiror Shares or Acquiror Convertible Securities, and (iii) ATIC Shares or ATIC Convertible Securities, are set out in Appendix 4 of this Scheme Document.

12.2	Further Disclosures. Appendix 4 of this Scheme Document sets out certain additional information relating to the Company.


13.	OVERSEAS SHAREHOLDERS


13.1	Overseas Shareholders. The applicability of the Scheme to Overseas Shareholders may be affected by the laws of the relevant overseas jurisdictions. Accordingly, Overseas Shareholders should keep themselves informed of and observe any applicable legal requirements. This Scheme Document will be sent to all Overseas Shareholders unless, due to restrictions or potential restrictions on sending such documents into the relevant overseas jurisdictions, this Scheme Document may not be sent to any Overseas Shareholder in such jurisdictions. For the avoidance of doubt, the Scheme is proposed to all Shareholders and applies to all the Scheme Shares, including those to whom this Scheme Document may not be and will not be sent.

13.2	Foreign Jurisdiction. It is the responsibility of any Overseas Shareholder who wishes to (i) request for this Scheme Document and/or any related documents or (ii) vote on or

LETTER TO SHAREHOLDERS


	participate in the Scheme, to satisfy itself/himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities or legal requirements.

In requesting this Scheme Document and/or any related documents, the Overseas Shareholder is deemed to represent and warrant to the Company and the Acquiror that it/he is in full observance of the laws of the relevant jurisdiction in that connection, and that it/he is in full compliance with all necessary formalities or legal requirements. This Scheme Document and/or any related documents will be given on this basis.

Any Overseas Shareholder who is in any doubt about its/his position should consult its/his professional adviser in the relevant jurisdiction. In voting on or participating in the Scheme, the Overseas Shareholder represents and warrants to the Company and the Acquiror that it/he is in full observance of the laws of the relevant jurisdiction in that connection, and that it/he is in full compliance with all necessary formalities or legal requirements.

13.3

Notice. The Company and the Acquiror each reserves the right to notify Shareholders of any matter, including the fact that the Scheme has been proposed, to any or all Shareholders with a registered address outside Singapore and the United States by an announcement to the SGX-ST or paid advertisement in a daily newspaper published and circulated in Singapore, and in each case, submitted to the SEC via a report on Form 6-K, in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement. For the avoidance of doubt, for as long as the Company remains listed on the SGX-ST, it will continue to notify all Shareholders of any matter relating to the Scheme by announcement to the SGXNET, and for so long as the Company remains a reporting company in the United States, it will submit to the SEC material matters relating to the Scheme via a report on Form 6-K.


14.	CONFIRMATION OF FINANCIAL RESOURCES

As reflected in Paragraph 11 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document, Credit Suisse, in their capacity as financial adviser to the Acquiror and ATIC in connection with the Acquisition and the Scheme, has confirmed that sufficient financial resources are available to the Acquiror to satisfy in full the aggregate Scheme Consideration payable by it for all the Scheme Shares and to satisfy full acceptance of the Preference Share Offer.


15.	FINANCIAL ADVISERS TO THE BOARD


15.1	Joint Financial Advisers to the Board: Morgan Stanley and Citi have been appointed as the FAs to the Board in connection with the Acquisition and the Scheme.


	15.1.1	Morgan Stanley’s Fairness Opinion. Morgan Stanley has rendered its Fairness Opinion, addressed solely to the Board, that, as at 7 September 2009, based on the considerations and subject to the qualifications set forth in its Fairness Opinion, the Scheme Consideration to be paid to the holders of Company Shares (including Company Shares held in the form of ADSs) pursuant to the Implementation Agreement was fair from a financial point of view to such holders. A copy of the Fairness Opinion issued by Morgan Stanley is reproduced in Appendix 1A of this Scheme Document. The Fairness

LETTER TO SHAREHOLDERS


		Opinion issued by Morgan Stanley does not constitute independent advice for the purposes of Rule 7.1 of the Code.


	15.1.2	Citi’s Fairness Opinion. Citi has rendered its Fairness Opinion, addressed solely to the Board, that, as at 7 September 2009, based upon the considerations and subject to the qualifications set forth in its Fairness Opinion, the Scheme Consideration to be paid to the Shareholders and the amount of consideration to be paid to the ADS Holders pursuant to the Implementation Agreement was fair from a financial point of view to such holders of Company Shares and ADSs (in each case, other than STS). A copy of the Fairness Opinion issued by Citi is reproduced in Appendix 1B of this Scheme Document. The Fairness Opinion issued by Citi does not constitute independent advice for the purposes of Rule 7.1 of the Code.


15.2	Independent Financial Adviser to the Independent Directors. Deutsche Bank has been appointed as the IFA to advise the Independent Directors for the purpose of making a recommendation to Shareholders in respect of the Scheme and the Preference Share Offer.

In respect of the Scheme, in its letter dated 9 October 2009 to the Independent Directors, a copy of which is reproduced in Appendix 2 of this Scheme Document (the “IFA’s Letter on the Scheme”), the IFA, subject to the bases, assumptions and qualifications set out in the IFA’s Letter on the Scheme, advised the Independent Directors to make the recommendation to Shareholders in relation to the Scheme as set out in Paragraph 9 of the IFA’s Letter on the Scheme and reproduced in italics below. The advice reproduced below should be considered and read in conjunction with, and in the context of, the full text of the IFA’s Letter on the Scheme. Unless otherwise defined or the context otherwise requires, all capitalised terms below shall have the same meanings as defined in the IFA’s Letter on the Scheme:

“Based upon, and having considered, inter alia, the factors described above and the information that has been made available to us as at the Latest Practicable Date, we are of the opinion that as at the Latest Practicable Date, the Scheme Consideration is fair and reasonable from a financial point of view. Accordingly, we would advise the Independent Directors to recommend that, in the absence of a superior offer, Shareholders should vote in favour of the Scheme.

We recommend that the Independent Directors should advise the Shareholders of Deutsche Bank’s opinion in this letter. We would also advise the Independent Directors to caution the Shareholders that they should not rely on our advice to the Independent Directors as the sole basis for deciding whether or not to vote in favor of the Scheme.”


16.	INDEPENDENT DIRECTORS’ RECOMMENDATION


16.1	Recommendation. All Directors (except Chia Song Hwee, the President and CEO of the Company, for the reasons set out in Paragraph 16.3 of this Letter to Shareholders) consider themselves to be independent for purposes of making a recommendation to Shareholders in respect of the Scheme.

None of the directors of the Acquiror or ATIC are related to the Directors or (as far as the Directors are aware) the controlling shareholders of the Company.

As noted in the Press Release issued by the Company and the Acquiror jointly on 7 September 2009, given the importance of scale and the need for substantial, continued capital investment in

LETTER TO SHAREHOLDERS

the Company, and having carefully assessed all strategic options available to the Company, the Independent Directors believe that the Acquisition provides the Shareholders with an opportunity to realise their investment. In addition, the Acquisition would enable the Company to accelerate its goal of becoming a leading player in the semiconductor industry.

Having regard to (i) the terms of the Scheme, (ii) the advice of the IFA to the Independent Directors as set out in the IFA’s Letter on the Scheme, and (iii) the fact that from the Announcement Date up to the Latest Practicable Date, no alternative offers for the Company Shares have been received by the Company, the Independent Directors consider, from a financial point of view, the terms of the Scheme to be fair and reasonable. The Independent Directors therefore unanimously recommend that, in the absence of a superior offer, Shareholders vote in favour of the Scheme at the Court Meeting.

Shareholders should read and consider carefully this Scheme Document, including the advice of the IFA to the Independent Directors on the Scheme set out in its entirety in Appendix 2 of this Scheme Document, before deciding whether to vote in favour of, or against, the Scheme. Shareholders should note that the advice of the IFA to the Independent Directors should not be relied upon by any Shareholder as the sole basis for deciding whether or not to vote in favour of the Scheme.

Shareholders should also be aware that there is currently no certainty that the Scheme will become effective nor any assurance that the trading volumes and market prices of the Company Shares will be maintained at current levels if the Scheme does not become effective for whatever reason. In the event that the Scheme becomes effective, it will be binding on all Entitled Shareholders and the Company will be delisted and withdrawn from the Official List of the SGX-ST, and the ADSs will be delisted and withdrawn from Nasdaq. The Company also intends to deregister the Company Shares and ADSs with the SEC and terminate its reporting obligations under the Exchange Act.


16.2	No Regard to Specific Objectives. The Independent Directors advise that Shareholders, in deciding whether to vote in favour of the Scheme, carefully consider the full text of the advice of the IFA to the Independent Directors on the Scheme and in particular, the various factors highlighted by the IFA in the IFA’s Letter on the Scheme.

In making the above recommendation, the Independent Directors have not had regard to the specific objectives, financial and tax situation or unique needs and constraints of any individual Shareholder. Shareholders should also note that the IFA, in rendering its advice to the Independent Directors in relation to the Scheme, did not have regard to the specific objectives, financial and tax situation or unique needs and constraints of any individual Shareholder. As different Shareholders would have different investment objectives and profiles, the Independent Directors recommend that any individual Shareholder who may require advice in the context of his specific investment objectives or portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional advisers immediately.


16.3	Exemption in Relation to Directors’ Recommendations. Chia Song Hwee has been exempted by the SIC from joining in the recommendations to Shareholders in relation to the Scheme, for the following reasons:


	16.3.1	he will be receiving the cash payment mentioned in Paragraph 11.2 of Appendix 4 of this Scheme Document; and

LETTER TO SHAREHOLDERS


	16.3.2	the Company is listed on both the SGX-ST and Nasdaq and it is required to comply with both the Code and U.S. securities laws in respect of the Acquisition. Under the Nasdaq rules, Chia Song Hwee does not qualify as an Independent Director because he is the CEO of the Company. Accordingly, U.S. investors would generally not expect Chia Song Hwee to be independent for the purpose of the Scheme.

In addition, in connection with the Scheme and the subsequent operational combination of the company with GLOBALFOUNDRIES to form a single undertaking, Chia Song Hwee has on 29 September 2009 entered into the GLOBALFOUNDRIES Employment Agreement to be employed as the COO and Executive Vice-President of GLOBALFOUNDRIES and, pursuant to which he will receive a compensation package, comprising salary, cash bonus, or performance/tenure-driven awards, which is commensurate with his position, responsibilities and seniority.

Notwithstanding such exemption, Chia Song Hwee still assumes responsibility for the accuracy of facts stated in this Scheme Document.


17.	DIRECTORS’ INTENTIONS

All Directors Intend to Vote in Favour of the Scheme. As at the Latest Practicable Date, all Directors intend to vote in favour of the Scheme at the Court Meeting in respect of their own beneficial shareholdings.


18.	GENERAL


18.1	Copies of Scheme Document. Shareholders, including Overseas Shareholders, may obtain additional copies of this Scheme Document and any related documents during normal business hours at the registered office of the Company at 60 Woodlands Industrial Park D Street 2 Singapore 738406 on any day prior to the date of the Court Meeting. Alternatively, an Overseas Shareholder may write to the Company at the same address to request for this Scheme Document and any related documents to be sent to an address in Singapore by ordinary post at it/his own risk, not later than 10 Market Days prior to the date of the Court Meeting.

18.2	General Information. Your attention is drawn to further relevant information in the Appendices of this Scheme Document. These Appendices form part of this Scheme Document.


19.	EXTRAORDINARY GENERAL MEETING AND CLASS MEETING

19.1

EGM and Class Meeting. Pursuant to the terms of the Implementation Agreement, the Company has undertaken to procure that an extraordinary general meeting (the “EGM”) be held immediately upon the conclusion of the Court Meeting (if the resolutions submitted to the Court Meeting are approved by the requisite majorities of Shareholders), for the purposes of passing special resolutions to amend the Articles by incorporating the provisions described in Paragraphs 19.2 (“Special Resolution (1)”) and 19.3 (“Special Resolution (2)”) of this Letter to Shareholders. Immediately upon conclusion of the EGM, the Company will procure that a meeting of the Preference Share Holders (the “Class Meeting”) be held for the purpose of passing Special Resolution (2).

LETTER TO SHAREHOLDERS


19.2	Transfer of New Company Shares. If passed at the EGM, Special Resolution (1) would amend the Articles such that:


	19.2.1	where the Acquisition is to be effected by way of a Scheme, subject to and upon the Scheme becoming effective and binding in accordance with its terms, if any new Company Shares are issued to any person other than any of GLOBALFOUNDRIES, the Acquiror or a subsidiary of any holding company for the time being of the Acquiror (a “New Member”) after:


	(i)	the Voting Record Time and on or prior to the Effective Date; or

	(ii)	the Effective Date,

each such New Member shall be required to transfer to the Acquiror (as the Acquiror may direct in writing to the Company), and the Acquiror shall be required to acquire from any such New Member, all and not some only of such new Company Shares on the relevant Transfer Date, free from all Encumbrances and with all rights attached to such new Company Shares on the relevant Transfer Date and thereafter attaching thereto, in consideration of a sum equal to the Transfer Consideration; or


	19.2.2	where the Acquisition is to be effected by way of an Offer, subject to and upon the completion of the Compulsory Acquisition, if any new Company Shares are issued to any New Member after:


	(i)	the Offer Cut-Off Date and on or prior to the Compulsory Acquisition Completion Date; or

	(ii)	the Compulsory Acquisition Completion Date,


19.3	Company’s Right to Treat Conversion as Redemption. If passed at both the EGM and at the Class Meeting, Special Resolution (2) would amend the Articles such that, subject to and upon:


	19.3.1	where the Acquisition is to be effected by way of a Scheme, the Scheme becoming effective and binding in accordance with its terms; or

	19.3.2	where the Acquisition is to be effected by way of an Offer, the completion of the Compulsory Acquisition,

LETTER TO SHAREHOLDERS


19.4	Effect of Special Resolution (1) and Special Resolution (2).


	19.4.1	The effect of Special Resolution (1) is that, upon the Scheme becoming effective and binding or the completion of the Compulsory Acquisition, Company Shares which are issued to a New Member will be compulsorily acquired by the Acquiror (as the Acquiror may direct in writing to the Company) at the same consideration as the consideration for which Company Shares are acquired by the Acquiror under the Scheme or the Offer, as the case may be, subject to such adjustments as may be appropriate in the event of a sub-division or consolidation of the ordinary share capital of the Company.

	19.4.2	The effect of Special Resolution (2) is that, upon the Scheme becoming effective and binding or the completion of the Compulsory Acquisition, if any Preference Share Holder wishes to convert the CRPS held by it into Company Shares, the Company may (but shall not be obliged to) settle such obligation to such Preference Share Holder by paying the Redemption Amount in lieu of issuing such Company Shares.


19.5	Preference Share Holders’ Right to Vote at the EGM. Pursuant to Article 4A.11(1)(c) of the Articles, Preference Share Holders may vote at any general meeting of the Company if the resolution in question, inter alia, varies the rights attached to the CRPS or is for the winding up of the Company. As Special Resolution (2) to be voted at the EGM varies the rights attached to the CRPS, the Preference Share Holders are entitled to attend and vote on Special Resolution (2) at the EGM. The Preference Share Holders are not entitled to vote on Special Resolution (1) at the EGM.

19.6	Notice of EGM, Notice of Class Meeting and ADS Depositary Notice. Notice of the EGM for the purpose of passing Special Resolution (1) and Special Resolution (2), together with the accompanying Proxy Statement, has been despatched by the Company to Shareholders and Preference Share Holders at the same date as the date of despatch of the Scheme Document. Notice of the Class Meeting for the purpose of passing Special Resolution (2), together with the accompanying Proxy Statement, has been despatched by the Company to Preference Share Holders at the same date as the date of despatch of the Scheme Document. The ADS Depositary Notice, which includes notice of the EGM for the purpose of passing Special Resolution (1) and Special Resolution (2), together with the ADS Voting Instructions Card, will be despatched by the ADS Depositary to ADS Holders on the same date as the date of despatch of the Scheme Document to ADS Holders.


20.	DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors (including any who may have delegated detailed supervision of this Scheme Document) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Scheme Document are fair and accurate and that no material facts have been omitted from this Scheme Document, and they jointly and severally accept responsibility accordingly.

LETTER TO SHAREHOLDERS

Where any information has been extracted from published or publicly available sources, the sole responsibility of the Directors has been to ensure, through reasonable enquiries, that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this Scheme Document. The Directors do not accept any responsibility for any information relating to or opinions expressed by the FAs, the IFA, the Acquiror or ATIC, whether in Appendix 1A, 1B, 2 or 3 of this Scheme Document or otherwise.

Yours faithfully

For and on behalf of

the Board of Directors of

Chartered Semiconductor Manufacturing Ltd.

James A. Norling

Chairman

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

ACQUISITION OF THE COMPANY BY THE ACQUIROR BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 210 OF THE COMPANIES ACT


1.	INTRODUCTION


1.1	Acquisition. On 7 September 2009, the respective boards of the Company and the Acquiror jointly announced that the Company and the Acquiror had entered into the Implementation Agreement to effect the Acquisition by way of the Scheme. The Acquiror is a company incorporated in Abu Dhabi and wholly-owned by ATIC. ATIC is a technology investment company wholly-owned by the Government of Abu Dhabi.

1.2	Explanatory Statement. This Explanatory Statement should be read in conjunction with the full text of this Scheme Document, including the Scheme as set out on pages 213 to 219 of this Scheme Document. Capitalised terms used in this Explanatory Statement have the same meaning as those defined on pages 4 to 19 of this Scheme Document unless otherwise indicated.


2.	THE SCHEME


2.1	Terms.


	2.1.1	Scheme: The Acquisition will be effected by way of the Scheme and in accordance with the Code.

	2.1.2	Transfer of Shares: Under the Scheme:


	(i)	all the Scheme Shares held by Entitled Shareholders will be transferred to the Acquiror:


	(a)	fully paid;

	(b)	free from all Encumbrances; and


	(c)	together with all rights, benefits and entitlements as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date; and


	(ii)	in consideration for such transfer, and upon and subject to the Scheme becoming effective, each Entitled Shareholder will be entitled to receive from the Acquiror the Scheme Consideration, being S$2.68 in cash for each Scheme Share, provided that if any dividend or distribution with respect to the Company Shares is declared or announced on or after the Announcement Date, and such dividend or distribution is paid or made to holders of the Company Shares of record as at any date that is on or prior to the Effective Date, the Scheme Consideration shall be reduced by the amount of such dividend or distribution.


	2.1.3	ADS Holders: ADS Holders will be entitled to receive their consideration from the ADS Depositary in accordance with the terms of the ADS Deposit Agreement. Based on the prevailing exchange rate from Bloomberg L.P. on the Latest Practicable Date, of S$1.4138 to US$1, the equivalent amount of consideration for each ADS is approximately US$18.96, less the applicable ADS Depositary’s fees, taxes and expenses. The actual

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


		amount per ADS that ADS Holders will receive will depend on the applicable prevailing exchange rate at the time of conversion by the ADS Depositary of the Scheme Consideration from Singapore Dollars to United States Dollars and the amount of applicable ADS Depositary’s fees, taxes and expenses.


2.2	Scheme Consideration. The Scheme Consideration was arrived at after arm’s length negotiations between the Company and the Acquiror, on a willing-seller, willing-buyer basis, after taking into consideration, amongst other things, the recent market price of the Company Shares.

The full text of the advice of the IFA to the Independent Directors on the Scheme is set out in Appendix 2 of this Scheme Document.


2.3	Scheme Shares. The Scheme will be extended, on the same terms and conditions to:


	2.3.1	all Company Shares, including Company Shares represented by ADSs; and

	2.3.2	all new Company Shares unconditionally issued or to be issued on or before the Books Closure Date pursuant to (i) the valid exercise of any Options (ii) the vesting of any awards under the RSU Plan, (iii) the vesting of any awards under the PSU Plan, (iv) the valid conversion of CRPS into new Company Shares and (v) the valid exercise by GS of the GS Option.

For the purpose of the Scheme, the expression “Scheme Shares” shall include existing Company Shares and such new Company Shares.


2.4	Waiver of Rights to a General Offer. Shareholders and ADS Holders should note that by voting in favour of the Scheme or instructing the ADS Depositary to vote in favour of the Scheme, respectively, they are agreeing to the Acquiror and the parties acting in concert with it acquiring effective control of the Company without having to make a general offer for the Company.

2.5	No Cash Outlay. Shareholders should note that no cash outlay (including any stamp duties or brokerage expenses) will be required from Shareholders under the Scheme.


3.	PRINCIPAL TERMS OF THE IMPLEMENTATION AGREEMENT

The Scheme is conditional upon the satisfaction (or, where applicable, waiver) of the Scheme Conditions by not later than 5:00 p.m. on the Long-Stop Date or such other date as the Parties may agree.

A summary of the principal terms of the Implementation Agreement can be found in Paragraph 3 of the Company’s Letter to Shareholders. Full details of the Scheme Conditions are reproduced in Appendix 5 of this Scheme Document.


4.	THE PREFERENCE SHARE OFFER

Please refer to Paragraph 3.1 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document for details on the Preference Share Offer.

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


5.	THE GS OPTION

Please refer to Paragraph 5 of the Company’s Letter to Shareholders for details in relation to the GS Option.


6.	IRREVOCABLE UNDERTAKINGS


6.1	STS Irrevocable Undertaking. STS, which holds 586,752,688 Company Shares as at the Latest Practicable Date, representing approximately 62.28 per cent. of all the Company Shares, entered into the STS Irrevocable Undertaking, pursuant to which it has given an irrevocable undertaking to the Acquiror to, inter alia:


	6.1.1	Vote in Favour of the Scheme at the Court Meeting: vote or procure the voting of all its Company Shares (i) in favour of the Scheme at the Court Meeting and (ii) against any resolution or proposal to adjourn the Court Meeting, except in the event the Company seeks an adjournment of the Court Meeting for any reason described in Paragraph 3.5.4 of the Company’s Letter to Shareholders or with the prior written consent of the Acquiror;

	6.1.2	Accept the Offer: in the event the Acquiror validly exercises the Switch Option, (i) accept the Offer in respect of all its Company Shares not later than five business days after the despatch by or on behalf of the Acquiror of the formal document in relation to the Offer and (ii) not withdraw its acceptance of the Offer, without the prior written consent of the Acquiror; and

	6.1.3	Vote in Favour of Special Resolution (1) and Special Resolution (2) at the EGM: to the extent permitted by applicable laws, vote or procure the voting of all its Company Shares (i) in favour of Special Resolution (1) and Special Resolution (2) at the EGM, and (ii) against any resolution or proposal to adjourn the EGM, except in the event the Company seeks an adjournment of the EGM where the Company seeks an adjournment of the Court Meeting for any reason described in Paragraph 3.5.4 of the Company’s Letter to Shareholders or with the prior written consent of the Acquiror.

The STS Irrevocable Undertaking will continue to be binding on STS even if the Acquiror does not exercise the Switch Option in the event of a Superior Offer.

Further, STS has agreed to be bound by certain non-solicitation provisions during the term of the STS Irrevocable Undertaking, save for certain exceptions.


6.2	Management Executive Irrevocable Undertakings. Each of Chia Song Hwee (President and CEO of the Company) and George Thomas (the Chief Financial Officer of the Company) has entered into the Management Executive Irrevocable Undertaking pursuant to which each of them has given an irrevocable undertaking to the Acquiror on terms substantially similar to the STS Irrevocable Undertaking.

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


6.3	Termination. The Irrevocable Undertakings will each terminate on the earliest of the following dates:


	6.3.1	the Long-Stop Date, or such other date as the Acquiror and the party giving the relevant Irrevocable Undertaking may agree in writing, if the Scheme lapses, is withdrawn or does not become effective by such time for any reason other than a breach by such party of its obligations under the relevant Irrevocable Undertaking;

	6.3.2	the date an Offer is made, in the event the Acquiror makes such Offer in lieu of proceeding with the Scheme and such Offer is not made in compliance with the valid exercise of the Switch Option;

	6.3.3	the date the Scheme lapses, is withdrawn or does not become effective for any reason other than a breach by the party giving the relevant Irrevocable Undertaking of its obligations under the relevant Irrevocable Undertaking; and

	6.3.4	the date the Scheme becomes effective in accordance with its terms,


6.4	No Other Irrevocable Undertakings. Save for the Irrevocable Undertakings, the Company understands from the Acquiror that none of the Acquiror, ATIC and any party acting in concert with them has received any other irrevocable undertakings from any other party to vote in favour of, or reject, the Scheme as at the Latest Practicable Date.


7.	INFORMATION ON THE COMPANY

Further information relating to the Company is set out in Appendix 4 of this Scheme Document.

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


8.	INFORMATION ON THE ACQUIROR AND ATIC

Please refer to Schedule A to the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document for information on the Acquiror and ATIC.


9.	RATIONALE AND BENEFITS OF THE ACQUISITION AND FUTURE PLANS FOR THE GROUP

The Acquiror’s rationale and benefits of the Acquisition and future plans for the Group are set out in Paragraph 4 of the Letter from the Acquiror to Shareholders in Appendix 3 of this Scheme Document.


10.	COURT MEETING


10.1	Court Meeting. The Scheme, which is proposed pursuant to Section 210 of the Companies Act, has to be approved at the Court Meeting by a majority in number of, and representing not less than 75 per cent. in value of the Company Shares held by, Shareholders present and voting, either in person or by proxy, at the Court Meeting. Voting at the Court Meeting will be by way of poll.

By an order of the Court dated 1 October 2009, the Court Meeting was directed to be convened for the purpose of approving the Scheme.

By proposing that the Acquisition be implemented by way of the Scheme, the Company is providing Shareholders with an opportunity to decide at the Court Meeting whether they consider the Scheme to be in their best interests.

When the Scheme, with or without modification, becomes effective, it will be binding on all Entitled Shareholders, whether or not they were present in person or by proxy, and whether or not they voted at the Court Meeting, and if they voted, whether or not they voted in favour of the Scheme at the Court Meeting. Shareholders do not have any specific rights to require an independent appraisal of the value of the Company Shares in connection with the Scheme.

10.2

ADS Holders. ADS Holders will not be entitled to attend or vote at the Court Meeting. However, ADS Holders may instruct the ADS Depositary to exercise the voting rights for the Company Shares represented by their ADSs. Pursuant to the ADS Deposit Agreement, voting instructions may be given only in respect of a number of ADSs representing an integral number of Company Shares. The ADS Depositary shall endeavour, insofar as reasonably practicable and permitted under applicable law, the provisions of the Articles and the provisions of the ADS Deposit Agreement, to vote or cause the ADS Custodian Bank to vote the Company Shares (in person or in proxy) represented by such ADS Holder’s ADSs in accordance with the ADS Holder’s instructions.

Together with this Scheme Document, the ADS Depositary will despatch an ADS Voting Instructions Card and an ADS Depositary Notice to ADS Holders, which explain how an ADS Holder may instruct the ADS Depositary to vote or cause the ADS Custodian Bank to vote the Company Shares underlying such ADS Holder’s ADSs at the Court Meeting. ADS Holders as at 5:00 p.m. (New York time) on 5 October 2009 (the “ADS Voting Record Date”) may sign and complete an ADS Voting Instructions Card in accordance with the instructions printed thereon. The ADS Voting Instructions Card must be completed and received by the ADS Depositary no later than 10:00 a.m., (New York time) on 29 October 2009 (the “ADS Voting Deadline”) to ensure that

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

the ADS Depositary votes or causes the ADS Custodian Bank to vote the Company Shares underlying the ADSs covered by such ADS Voting Instructions Card.

ADS holders who hold their ADSs in “street name” or indirectly should contact their bank, broker, financial institution or share plan administrator through which they hold their ADSs if they wish their voting instructions to be reflected on an ADS Voting Instructions Card and received by the ADS Depositary by this deadline.

If the ADS Depositary does not timely receive a duly completed and signed ADS Voting Instructions Card from an ADS Holder prior to the ADS Voting Deadline, then neither the ADS Depositary nor the ADS Custodian Bank will vote the Company Shares underlying the ADSs of such ADS Holder at the Court Meeting. The ADS Deposit Agreement provides in Section 4.10 that neither the ADS Depositary nor the ADS Custodian Bank shall, under any circumstances exercise any discretion as to voting and neither the ADS Depositary nor the ADS Custodian Bank shall vote, attempt to exercise the right to vote, or in any way make use of, for purposes of establishing a quorum or otherwise, the Company Shares represented by the ADS except pursuant to and in accordance with such written instructions from ADS Holders. If voting instructions are received by the ADS Depositary from any ADS Holder on or before the ADS Voting Deadline, which are signed but without further indication as to specific instructions, the ADS Depositary will deem such ADS Holder to have instructed the ADS Depositary to vote in favour of the items set forth in such instructions.

ADS Holders who wish to attend the Court Meeting or to be present at the Court hearings in relation to the Scheme should arrange for the surrender and cancellation of their ADS to the ADS Depositary and delivery of Company Shares in accordance with the terms and conditions of the ADS Deposit Agreement so as to become Shareholders prior to the date and time of the Court Meeting. Such withdrawal of the Company Shares underlying the ADSs is expected to be suspended from the ADS Voting Record Date to the date of the Court Meeting.

ADS Holders requiring assistance can contact the ADS Depositary toll-free at 1-877-248-4237 (from within the U.S.) or at 1-781-575-4555 (from outside the U.S.) between 9:00 a.m. and 5:00 p.m. (New York time) Monday to Friday (except U.S. public holidays).


10.3	Notice. The notice of the Court Meeting is set out on pages 220 to 221 of this Scheme Document. You are requested to take note of the date and time of the Court Meeting.


11.	REGULATORY APPROVALS


11.1	SIC.


	11.1.1	Code: The SIC has confirmed that the Scheme is exempted from Rules 14, 15, 16, 17, 20.1, 21, 22, 28, 29 and 33.2 and Note 1(b) on Rule 19 of the Code, subject to the following conditions:


	(i)	the common substantial shareholders of the Company and the Acquiror abstain from voting on the Scheme;

	(ii)	the Acquiror and parties acting in concert with it abstain from voting on the Scheme;

	(iii)	the Company Directors who are also Acquiror Directors abstain from making a recommendation on the Scheme to the Shareholders; and

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


	(iv)	the Company appoints an independent financial adviser to advise Shareholders on the Scheme.

As at the Latest Practicable Date:


	(a)	the Company understands that there are no common substantial shareholders of the Company and the Acquiror;

	(b)	the Company understands that the Acquiror and the parties acting in concert with it⁽¹⁾ do not hold any voting rights in the Company and as such will not vote on the Scheme; and


	(c)	there are no Company Directors who are also Acquiror Directors or who are acting in concert with the Acquiror.

In compliance with the Code, Deutsche Bank has been appointed as the IFA to advise the Independent Directors for the purpose of making a recommendation to Shareholders in respect of the Scheme.


11.2	Scheme Conditions. The SIC has confirmed that it has no objections to the Scheme Conditions. However, any Party seeking to terminate the Implementation Agreement by exercising its Termination Right must first consult with the SIC and obtain the SIC’s approval of, or a statement that the SIC has no objections to, such termination.


12.	EFFECT OF THE SCHEME

12.1

Effect of the Scheme. Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and (i) subject to the approval of the SGX-ST, the Company will be delisted from the Official List of the SGX-ST and (ii) subject to the filing of a notification with the SEC and prior written notification to Nasdaq, the ADSs will be delisted from Nasdaq. An application has been made to seek confirmation from the SGX-ST to delist the Company from the Official List of the SGX-ST upon the Scheme becoming effective and binding. The Company also intends to deregister the Company Shares and ADSs with the SEC and terminate its reporting obligations under the Exchange Act. Notice is hereby given that, conditional upon the Scheme becoming effective, the ADS Deposit Agreement will be terminated as at the Effective Date.

The SGX-ST has advised that subject to the effectiveness of the Scheme and the completion of the Acquisition, it has no objection to the delisting of the Company from the Official List of the SGX-ST. The SGX-ST’s confirmation, however, is not an indication of the merits of the delisting of the Company from the Official List of the SGX-ST.

SHAREHOLDERS AND ADS HOLDERS SHOULD NOTE THAT BY VOTING IN FAVOUR OF THE SCHEME OR INSTRUCTING THE ADS DEPOSITARY TO VOTE IN FAVOUR OF THE SCHEME, RESPECTIVELY, THE COMPANY WILL BE DELISTED FROM THE SGX-ST AND THE ADSs WILL BE DELISTED FROM NASDAQ IF THE SCHEME BECOMES EFFECTIVE IN ACCORDANCE WITH ITS TERMS. FURTHERMORE, IN SUCH EVENT, THE COMPANY

⁽¹⁾ In relation to Credit Suisse and such entities and branches within the Credit Suisse Group AG presumed to be acting in concert with the Acquiror, such information is as at 29 September 2009 (being two Business Days prior to the Latest Practicable Date).

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

INTENDS TO DEREGISTER THE COMPANY SHARES AND ADSs WITH THE SEC AND TERMINATE ITS REPORTING OBLIGATIONS UNDER THE EXCHANGE ACT. NOTICE IS HEREBY GIVEN THAT, CONDITIONAL UPON THE SCHEME BECOMING EFFECTIVE, THE ADS DEPOSIT AGREEMENT WILL BE TERMINATED AS AT THE EFFECTIVE DATE.


13.	IMPLEMENTATION OF THE SCHEME


13.1	Court Approval. Upon the approval of the Scheme by a majority in number of, and representing not less than 75 per cent. in value of the Company Shares held by, Shareholders present and voting, either in person or by proxy, at the Court Meeting, an application will be made to the Court by the Company to approve the Scheme. Voting at the Court Meeting will be by way of poll.

If the Court approves the Scheme, the Company and the Acquiror will (subject to the satisfaction (or, where applicable, waiver) of all the Scheme Conditions and provided neither the Acquiror nor the Company seeks to terminate the Implementation Agreement by exercising its Termination Right, if any) take the necessary steps to implement the Scheme.


13.2	Procedures. Subject to the Scheme becoming effective and binding, the procedures for the implementation of the Scheme are as follows:


	13.2.1	Transfer of Scheme Shares: the Scheme Shares held by Entitled Shareholders will be transferred to the Acquiror and/or its nominee, as follows:


	(i)	in the case of Entitled Shareholders (not being Depositors), the Company shall authorise any person to execute or effect on behalf of all such Entitled Shareholders, not later than three Business Days after the Effective Date, an instrument or instruction of transfer of all the Scheme Shares held by such Entitled Shareholders and every such instrument or instruction of transfer so executed shall be effective as if it had been executed by the relevant Entitled Shareholders; and

	(ii)	in the case of Entitled Shareholders (being Depositors), CDP shall, not later than three Business Days in Singapore after the Effective Date, debit all the Scheme Shares standing to the credit of the Securities Account of such Entitled Shareholders and credit all of such Scheme Shares to the Securities Account of the Acquiror or such Securities Accounts as directed by the Acquiror.


	13.2.2	Payment of the Scheme Consideration: the Acquiror shall, not later than 10 days after the Effective Date, and against the transfer of the Scheme Shares set out in Paragraph 13.2.1 of this Explanatory Statement above, make payment of the Scheme Consideration payable on the transfer of the Scheme Shares to:


	(i)	Entitled Shareholders whose Scheme Shares are not deposited with CDP:

each Entitled Shareholder (not being a Depositor) by sending a cheque for the aggregate Scheme Consideration payable to and made out in favour of such Entitled Shareholder by ordinary post to its/his address in the Register of Members of the Company at the close of business on the Books Closure Date, at the sole risk of such Entitled Shareholder, or in the case of joint Entitled Shareholders, to the first-named Entitled Shareholder made out in favour of such Entitled Shareholder by ordinary post to its/his address in the Register of

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

Members of the Company at the close of business on the Book Closure Date, at the sole risk of such joint Entitled Shareholders; and


	(ii)	Entitled Shareholders whose Scheme Shares are deposited with CDP:

each Entitled Shareholder (being a Depositor) by making payment of the aggregate Scheme Consideration payable to such Entitled Shareholder to CDP. CDP shall (a) in the case of an Entitled Shareholder (being a Depositor) who has registered for CDP’s direct crediting service, credit the aggregate Scheme Consideration payable to such Entitled Shareholder to the designated bank account of such Entitled Shareholder; and (b) in the case of an Entitled Shareholder (being a Depositor) who has not registered for CDP’s direct crediting service, send to such Entitled Shareholder, by ordinary post to its/his address in the Depository Register at the close of business on the Books Closure Date and at the sole risk of such Entitled Shareholder, a cheque for such aggregate Scheme Consideration payable to and made out in favour of such Entitled Shareholder.

Assuming that the Scheme becomes effective on 10 December 2009, the crediting by CDP of the Scheme Consideration into the designated bank accounts of the Entitled Shareholders (in the case of Entitled Shareholders being Depositors and who have registered with CDP for its direct crediting service) or, as the case may be, the posting of cheques for the Scheme Consideration under the Scheme, is expected to take place on or before 18 December 2009.

On or after the day falling six months after the posting of such cheques by the Acquiror, the Acquiror shall have the right to cancel or countermand payment of any such cheque which has not then been cashed (or has been returned uncashed) and shall place all moneys represented thereby in a bank account in the Company’s name with a licensed bank in Singapore selected by the Company. The Company or its successor entity shall hold such moneys until the expiration of six years from the Effective Date and shall prior to such date make payments therefrom of the sums (without interest, in accordance with Paragraph 2 of the Scheme) payable pursuant to Paragraph 2 of the Scheme (as set out on page 218 of this Scheme Document) to persons who satisfy the Company or its successor entity that they are respectively entitled thereto and that the cheques referred to in Paragraph 2 of the Scheme (as set out on page 218 of this Scheme Document) of which they are payees have not been cashed.

On the expiry of six years from the Effective Date, the Acquiror shall be released from any further obligation to make any payments under the Scheme and the Company or its successor entity shall transfer to the Acquiror the balance (if any) of the sums then standing to the credit of the bank account referred to in Paragraph 3(ii) of the Scheme (as set out on page 218 of this Scheme Document) including accrued interest subject, if applicable, to the deduction of interest, tax or any withholding tax or any other deduction required by law and subject to the deduction of any expenses; and


	13.2.3	Cancellation of Share Certificates: as at and from the Effective Date, all existing share certificates relating to the Scheme Shares held by Entitled Shareholders will cease to have any effect as evidence of title of the Scheme Shares represented therein, and Entitled Shareholders (not being Depositors) are required to forward their existing share certificates

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


		relating to their Scheme Shares to M&C Services Private Limited’s registered office at 138 Robinson Road #17-00 The Corporate Office Singapore 068906 as soon as possible, but not later than 10 days after the Effective Date for cancellation.

13.3

Additional Procedures for ADS Holders. On the Effective Date, the Company Shares underlying the ADSs will be transferred to the Acquiror, and the certificates in respect of the ADSs should be surrendered to the ADS Depositary in accordance with the ADS Deposit Agreement and any procedures as may be notified by the ADS Depositary to the ADS Holders. The ADS Custodian Bank, as Entitled Shareholder pursuant to Paragraph 13.2.2(ii) of this Explanatory Statement, will receive an amount in Singapore Dollars equal to the total Scheme Consideration payable in respect of all the Scheme Shares held by the ADS Custodian Bank in accordance with the Scheme. Upon the ADS Depositary receiving confirmation from the ADS Custodian Bank of receipt of the aggregate Scheme Consideration from CDP, the ADS Depositary will, pursuant to and in accordance with the terms of the ADS Deposit Agreement, as promptly as practicable:


	13.3.1	convert or cause to be converted (by sale or in any other manner as it may reasonably determine) such aggregate amount of the Scheme Consideration from Singapore Dollars into United States Dollars (the “Converted Amount”); and

	13.3.2	distribute such Converted Amount (net of any applicable fees, any reasonable and customary expenses incurred in such conversion and any expenses incurred on behalf of ADS Holders in complying with currency exchange control or other governmental requirements) (the “Net Converted Amount”) upon surrender of their ADSs to the ADS Depositary.

ADS holders who hold their ADSs in “street name” or indirectly will receive credit of the Net Converted Amount to their account from their bank, broker or financial institution. The ADS Depositary will remit the relevant funds to DTC upon surrender by DTC of the ADSs to the ADS Depositary, and DTC will in turn credit the ADS holder’s bank, broker, financial institution or share plan administrator.

As at the Effective Date, each ADS will represent the right to receive the Net Converted Amount applicable to 10 Scheme Shares, rather than the right to receive 10 Company Shares. The ADS Depositary shall, promptly after the Books Closure Date, distribute a notice to ADS Holders detailing the manner in which ADSs may be surrendered to the ADS Depositary in exchange for the Net Converted Amount applicable to their ADSs.


14.	BOOKS CLOSURE DATE


14.1	Notice of Books Closure Date. Subject to the approval of the Scheme by Shareholders at the Court Meeting and the approval of the Scheme by the Court, notice will be given of the Books Closure Date for the purpose of determining the entitlements of the Entitled Shareholders under the Scheme. The Books Closure Date is tentatively scheduled on 9 December 2009 at 5:00 p.m.

14.2	Dates of Closure of ADS Depositary Books. Upon receipt of notice from the Company of the Books Closure Date, the ADS Depositary shall announce the applicable dates for closure of the ADS Depositary books for issuance and cancellation of ADSs.

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


14.3	No Transfers. No transfer of the Company Shares may be effected after the Books Closure Date.

14.4	Delisting, Termination of ADS Deposit Agreement and Deregistration with the SEC. Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and (i) subject to the approval of the SGX-ST, the Company will be delisted from the Official List of the SGX-ST and (ii) subject to the filing of a notification with the SEC and prior written notification to Nasdaq, the ADSs will be delisted from Nasdaq. An application has been made to seek confirmation from the SGX-ST to delist the Company from the Official List of the SGX-ST upon the Scheme becoming effective and binding. The Company also intends to deregister the Company Shares and ADSs with the SEC and terminate its reporting obligations under the Exchange Act. Notice is hereby given that, conditional upon the Scheme becoming effective, the ADS Deposit Agreement will be terminated as at the Effective Date.

The Scheme is tentatively scheduled to become effective on or about 10 December 2009 and accordingly (assuming the Scheme is effective on 10 December 2009):


	14.4.1	the Company is expected to be delisted and withdrawn from the Official List of the SGX-ST on or about 18 December 2009. It is therefore expected that, subject to the approval of the SGX-ST, the Company Shares will cease to be traded on the SGX-ST from 4 December 2009 at 5:00 p.m., being three Market Days before the expected Books Closure Date; and

	14.4.2	the ADSs are expected to be suspended from trading on Nasdaq upon the effectiveness of the Scheme on 10 December 2009 and, subject to the filing of a notification with the SEC and Nasdaq, the ADSs are expected to be formally delisted and withdrawn from Nasdaq on or about 21 December 2009.


15.	SETTLEMENT AND REGISTRATION PROCEDURES


15.1	Settlement and Registration Procedures. Subject to the Scheme becoming effective and binding, the following settlement and registration procedures will apply:


	15.1.1	Entitled Shareholders whose Scheme Shares are not deposited with CDP:

Entitlements of Shareholders (not being Depositors), whose Scheme Shares are not deposited with CDP, to the Scheme Consideration will be determined on the basis of their holdings of Scheme Shares appearing in the Register of Members of the Company at 5:00 p.m. on the Books Closure Date which is tentatively scheduled on 9 December 2009.

Shareholders (not being Depositors) who have not already done so are requested to take the necessary action to ensure that the Scheme Shares owned by them are registered in their names by 5:00 p.m. on the Books Closure Date.

From the Effective Date, each existing share certificate representing a former holding of the Scheme Shares by the Entitled Shareholders (not being Depositors) will cease to be evidence of title to the Scheme Shares represented thereby. Within 10 days of the Effective

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

Date, the Acquiror shall make payment of the Scheme Consideration to each Entitled Shareholder based on its/his holding of the Scheme Shares as at 5:00 p.m. on the Books Closure Date.


	15.1.2	Entitled Shareholders whose Scheme Shares are deposited with CDP:

Entitlements of Shareholders, whose Scheme Shares are deposited with CDP, to the Scheme Consideration will be determined on the basis of the number of Scheme Shares standing to the credit of their Securities Accounts at 5:00 p.m. on the Books Closure Date.

Shareholders (being Depositors) who have not already done so are requested to take the necessary action to ensure that the Scheme Shares owned by them are credited to their Securities Accounts by 5:00 p.m. on the Books Closure Date.

Following the Effective Date, CDP will debit from each relevant Securities Account the number of Scheme Shares standing to the credit of the Securities Account of the relevant Entitled Shareholder (being a Depositor).

Within 10 days of the Effective Date, CDP shall make payment of the Scheme Consideration to each Entitled Shareholder (being a Depositor) based on the number of Scheme Shares standing to the credit of his or its Securities Account as at 5:00 p.m. on the Books Closure Date.


15.2	Additional Settlement Procedures for ADS Holders. Entitlements of ADS Holders to the distribution of the Net Converted Amount (or any part thereof) will be determined on the basis of the number of ADSs surrendered to the ADS Depositary.


16.	DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN THE COMPANY SHARES

The interests of the Directors and the Substantial Shareholders in the Company Shares are set out under Paragraph 3 of Appendix 4 of this Scheme Document. The effect of the Scheme on such interests of the Directors and Substantial Shareholders does not differ from that of the other Shareholders.


17.	OVERSEAS SHAREHOLDERS


17.1	Overseas Shareholders. The applicability of the Scheme to Overseas Shareholders may be affected by the laws of the relevant overseas jurisdictions. Accordingly, Overseas Shareholders should keep themselves informed of and observe any applicable legal requirements. This Scheme Document will be sent to all Overseas Shareholders unless, due to restrictions or potential restrictions on sending such documents into the relevant overseas jurisdictions, this Scheme Document may not be sent to any Overseas Shareholder in such jurisdictions. For the avoidance of doubt, the Scheme is proposed to all Shareholders and applies to all the Scheme Shares, including those to whom this Scheme Document may not be and will not be sent.

17.2	Foreign Jurisdiction. It is the responsibility of any Overseas Shareholder who wishes to (i) request for this Scheme Document and/or any related documents or (ii) vote on or participate in the Scheme, to satisfy itself/himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


	consent which may be required, and compliance with all necessary formalities or legal requirements.

17.3


18.	TAXATION

18.1

Singapore Taxation. The statements made herein regarding taxation are general in nature and based on certain aspects of the tax laws of Singapore, announced budget measures in the Singapore Budget Statement 2009 and administrative guidelines issued by the relevant authorities in force as at the Latest Practicable Date and are subject to the enactment of such budget measures and any changes in such laws or administrative guidelines, or in the interpretation of these laws or guidelines, occurring after such date, which changes could be made on a retrospective basis. These laws and guidelines are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. The statements below are not to be regarded as advice on the tax implications or tax position of any Shareholder or ADS Holder. The statements made herein do not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to vote in favour of the Scheme at the Court Meeting and do not purport to deal with the tax consequences applicable to all categories of investors some of which (such as dealers in securities) may be subject to special rules:


	18.1.1	Gains on Disposal or Exercise: Singapore does not impose tax on capital gains. However, there are currently no specific laws or regulations which address the characterisation of capital gains and hence gains or profits derived by any Shareholder

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)


		or ADS Holder from the disposal of any Company Share or ADS may be construed to be of an income nature and subject to tax, especially if they arise from activities which are regarded as the carrying on of a trade or business in Singapore.


	18.1.2	Stamp Duty: Where existing Company Shares or ADSs evidenced in certificated form are acquired in Singapore, stamp duty is payable on the instrument of transfer of the Company Shares or ADSs at the rate of S$2.00 for every S$1,000 of the consideration for, or market value of, the Company Shares or ADSs, whichever is higher. The stamp duty is borne by the purchaser (and, in the case of the Scheme, by the Acquiror). Where no instrument of transfer of the Company Shares or ADSs is required to be executed, no stamp duty is payable on the acquisition of existing Company Shares or ADSs. Where an instrument of transfer of the Company Shares or ADSs is wholly executed outside Singapore and is received in Singapore stamp duty will be payable within 30 days of receipt of the instrument of transfer in Singapore.

Stamp duty is not applicable to electronic transfers of the Company Shares through the scripless trading system operated by CDP.


	18.1.3	Estate Duty: Singapore estate duty has been abolished with respect to all deaths occurring on or after 15 February 2008.

18.2

U.S. Taxation. TO COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT (i) THIS SCHEME DOCUMENT IS NOT INTENDED OR WRITTEN BY US TO BE USED, AND CANNOT BE USED BY ANY TAXPAYER, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE INTERNAL REVENUE CODE, (ii) THIS SCHEME DOCUMENT IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN AND (iii) A TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following summary describes the material U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of Company Shares or ADSs with respect to the disposition of Company Shares or ADSs pursuant to the Scheme. This summary deals only with Company Shares and ADSs held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “IR Code”), and does not address the tax consequences that may be relevant to holders of Options, other rights to acquire Company Shares or Company Shares that are acquired through the exercise of such Options or rights. This summary also does not address the tax consequences that may be relevant to holders in special tax situations including, without limitation, dealers in securities or currencies, traders that elect to use a mark-to-market method of accounting, holders that own Company Shares or ADSs as part of a “straddle,” “hedge,” “conversion transaction” or other integrated investment, banks or other financial institutions, insurance companies, tax-exempt organisations, U.S. expatriates, holders whose functional currency is not the U.S. dollar, holders that acquired Company Shares or ADSs in a compensatory transaction, holders that actually or constructively own 10 per cent. or more of the total voting power or value of all outstanding Company stock or holders that acquired Company Shares or ADSs upon the conversion or exchange of other stock or securities.

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

This summary is based upon the IR Code, applicable U.S. Treasury regulations, administrative pronouncements, and judicial decisions, in each case as in effect on the Latest Practicable Date, all of which are subject to change (possibly with retroactive effect). No ruling will be requested from the Internal Revenue Service (the “IRS”) regarding the tax consequences of the Scheme and there can be no assurance that the IRS will agree with the discussion set out below. Further, this summary does not address the state, local and foreign tax consequences of the disposition of Company Shares or ADSs pursuant to the Scheme.

As used herein, the term “U.S. Holder” means a beneficial owner of Company Shares or ADSs that is, for U.S. federal income tax purposes, (a) a citizen or resident of the United States, (b) a corporation or other entity taxable as a corporation created or organised under the laws of the United States or any political subdivision thereof or therein or the District of Columbia, (c) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (d) a trust (I) that is subject to the supervision of a court within the United States and the control of one or more United States persons as described in IR Code Section 7701(a)(30) or (II) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

If a partnership holds the Company Shares or ADSs, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. Partners of a partnership holding Company Shares or ADSs should consult their tax advisors regarding the U.S. federal income tax consequences of the disposition of the Company Shares or ADSs pursuant to the Scheme.


	18.2.1	Disposition of Company Shares or ADSs:

Subject to the discussion below under “Passive Foreign Investment Company”, a U.S. Holder who transfers Company Shares or ADSs for cash pursuant to the Scheme generally will recognise capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Company Shares or ADSs transferred in the Scheme. In general, capital gains recognised by a non-corporate U.S. Holder, including an individual, will be subject to a maximum U.S. federal income tax rate of 15 per cent. if the Company Shares or ADSs were held for more than one year. The deductibility of capital losses is subject to significant limitations.

If a U.S. Holder is a cash-basis taxpayer and receives foreign currency, such as Singapore Dollars, in connection with a transfer of Company Shares or ADSs pursuant to the Scheme, the amount realised will be based on the U.S. dollar value of the foreign currency received with respect to such Company Shares or ADSs, as determined on the settlement date of such transfer. If a U.S. Holder is an accrual-basis taxpayer, such U.S. Holder may elect the same treatment required of cash-basis taxpayers with respect to a transfer of Company Shares or ADSs pursuant to the Scheme, provided the election is applied consistently from year to year. The election may not be changed without the consent of the IRS. If a U.S. Holder is an accrual-basis taxpayer and does not elect to be treated as a cash-basis taxpayer for this purpose, such U.S. Holder might have a foreign currency gain or loss for U.S. federal income tax purposes attributable to currency fluctuation between the date on which the U.S. Holder becomes entitled to receive the Scheme Consideration and the settlement date. In addition, any U.S. Holder of ADSs might have additional foreign

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

currency gain or loss with respect to any difference between the U.S. Dollar value of the Singapore Dollars on the day the ADS Depositary receives such Singapore Dollars on behalf of such U.S. Holder and the Converted Amounts received by such U.S. Holder. Any such currency gain or loss would be in addition to the gain or loss, if any, that such U.S. Holder recognises on the transfer of Company Shares or ADSs pursuant to the Scheme and generally would be ordinary U.S. source gain or loss.


	18.2.2	Passive Foreign Investment Company:

If the Company is or has been a passive foreign investment company (“PFIC”) at any time during a U.S. Holder’s holding period and the U.S. Holder did not timely elect to be taxable currently on his or her pro rata share of the Company’s earnings pursuant to a qualified electing fund election, or to be taxed on a “mark-to-market” basis with respect to its Company Shares or ADSs, any gain recognised by the U.S. Holder as a result of its participation in the Scheme will be treated as ordinary income and will be subject to an interest charge. The Company would be a PFIC in any taxable year in which, after applying relevant look-through rules with respect to the income and assets of its subsidiaries, either (A) at least 50 per cent. of the gross value of its assets, based on a quarterly average, is attributable to assets that produce passive income or are held for the production of passive income or (B) at least 75 per cent. of its gross income is “passive income”. Although not free from doubt, the Company believes that it was not a PFIC for the taxable year ending 31 December 2008. There is a significant possibility that the Company is a PFIC for the current taxable year, but the determination cannot be made until the close of the taxable year. U.S. Holders are urged to consult their own tax advisors regarding the possibility of the Company being a PFIC for the current taxable year and the consequences of the Company being classified as a PFIC.


	18.2.3	Information Reporting:

Payments in respect of Company Shares and ADSs may be subject to information reporting to the IRS. In addition, a U.S. Holder (other than certain exempt holders including, among others, corporations) may be subject to backup withholding at a 28 per cent. rate on cash payments received in connection with the Scheme.

Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and certifies as to no loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. Backup withholding is not an additional tax. Rather, any amount withheld under the backup withholding rules will be creditable or refundable against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.


19.	ACTION TO BE TAKEN BY SHAREHOLDERS AND ADS HOLDERS

Shareholders who are unable to attend the forthcoming Court Meeting are requested to complete the enclosed Proxy Form in accordance with the instructions printed thereon and return them so as to arrive at the registered office of the Company at 60 Woodlands Industrial Park D Street 2 Singapore 738406, not less than 48 hours before the time fixed for the Court Meeting. Alternatively,

EXPLANATORY STATEMENT

(in compliance with Section 211 of the Companies Act)

the Proxy Form for the Court Meeting may be handed to the Chairman of the Court Meeting at the Court Meeting and before the commencement of the Court Meeting.

The completion and lodgement of Proxy Forms will not prevent Shareholders from attending and voting in person at the Court Meeting if they subsequently wish to do so. In such event, the relevant Proxy Forms will be deemed to be revoked.

ADS Holders should review the enclosed ADS Voting Instructions Card and ADS Depositary Notice for an explanation of how to instruct the ADS Depositary to vote the Company Shares underlying their ADSs at the Court Meeting. Please complete the enclosed ADS Voting Instructions Card and return it to Citibank, N.A. at the address set forth on the ADS Voting Instructions Card, before 10:00 a.m. (New York time) on 29 October 2009, the ADS Voting Deadline.


20.	IFA’S ADVICE TO THE INDEPENDENT DIRECTORS

The letter from Deutsche Bank, the IFA, setting out its advice to the Independent Directors on the Scheme is reproduced in Appendix 2 of this Scheme Document.


21.	GENERAL


21.1	Copies of Scheme Document. Shareholders, including Overseas Shareholders, may obtain additional copies of this Scheme Document and any related documents, during normal business hours at the registered office of the Company at 60 Woodlands Industrial Park D Street 2 Singapore 738406 on any day prior to the date of the Court Meeting. Alternatively, an Overseas Shareholder may write to the Company at the same address to request for this Scheme Document and any related documents to be sent to an address in Singapore by ordinary post at it/his own risk, not later than 10 Market Days prior to the date of the Court Meeting.

21.2	General Information. Your attention is drawn to further relevant information in the Appendices of this Scheme Document. These Appendices form part of this Scheme Document. This Explanatory Statement is qualified by, and should be read in conjunction with, the full text of this Scheme Document, including the Scheme as set out on pages 213 to 219 of this Scheme Document.

APPENDIX 1A - FAIRNESS OPINION FROM MORGAN STANLEY TO THE BOARD

September 7, 2009

Board of Directors
Chartered Semiconductor Manufacturing Ltd.
60 Woodlands Industrial Park D, Street Two
Singapore 738406

Members of the Board:

We understand that Chartered Semiconductor Manufacturing Ltd. (the “Company”) and ATIC International Investment Company LLC (“BidCo”), a wholly-owned subsidiary of Advanced Technology Investment Company LLC (the “Buyer”), have entered into a scheme implementation agreement dated September 7, 2009 (the “Scheme Implementation Agreement”), which provides, among other things, for the acquisition by BidCo by way of a scheme of arrangement (pursuant to Section 210 of the Companies Act, Chapter 50 of Singapore and the Singapore Code on Take-overs and Mergers (the “Code”)) (the “Scheme”) of all ordinary shares of the Company (the “Shares”) (including Shares held in the form of American Depositary Shares (“ADSs”)) for S$2.68 per Share in cash. The terms and conditions of the Scheme are more fully set forth in the Scheme Implementation Agreement. Except as otherwise defined herein, capitalized terms used herein shall have the same meaning ascribed to them in the Scheme Implementation Agreement.

You have asked for our opinion as to whether the consideration to be paid to the holders of the Shares (including Shares held in the form of ADSs) in connection with the Scheme (the “Scheme Consideration”) is fair from a financial point of view to such holders. The opinion set forth herein does not address the consideration to be paid to holders of the Preference Shares, grantees under the Company RSU and the Company PSU and GS in connection with the Scheme. Nothing herein constitutes, or may be construed as, independent advice, recommendation or opinion addressed to any person for or against accepting the Scheme. For purposes of the opinion set forth herein, we have:


(i)	reviewed certain publicly available financial statements and other business and financial information of the Company;

(ii)	reviewed certain internal financial statements and other financial and operating data concerning the Company;

(iii)	reviewed certain financial projections prepared by the management of the Company;

(iv)	discussed the past and current operations and financial condition and the prospects of the Company with senior executives of the Company;

(v)	reviewed the reported prices and trading activity for the Shares (including Shares held in the form of ADSs);

APPENDIX 1A - FAIRNESS OPINION FROM MORGAN STANLEY TO THE BOARD


(vi)	compared the financial performance of the Company and the prices and trading activity of the Shares (including Shares held in the form of ADSs) with that of certain other publicly-traded companies comparable with the Company and their securities;

(vii)	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

(viii)	participated in discussions and negotiations among representatives of the Company, the Buyer and certain parties and their financial and legal advisors;

(ix)	reviewed the Scheme Implementation Agreement, and certain related documents (including the announcement jointly issued by the Company and the BidCo in connection with the Scheme); and

(x)	performed such other analyses and considered such other factors as we have deemed appropriate.

We have assumed and relied upon, without independent verification, the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to us by the Company and formed a substantial basis for this opinion. With respect to the financial projections, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company of the future financial performance of the Company. In addition, we have assumed that the Scheme will be consummated in accordance with the terms set forth in the Scheme Implementation Agreement without any waiver, amendment or delay of any terms or conditions. We have assumed, without independent verification, that BidCo and its financial advisor are satisfied that BidCo can and will be able to implement the Scheme in full, and in particular but without limitation to the foregoing, that resources are available to BidCo to implement the Scheme in full. Morgan Stanley has assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed Scheme, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed Scheme. We have relied upon, without independent verification, the assessment by the Company of the validity of, and risks associated with, the Company’s existing and future technologies, intellectual property, products, services and business models. We are not legal, tax or regulatory advisors. We are financial advisors only and have relied upon, without independent verification, the assessment of the Company and its legal, tax or regulatory advisors with respect to legal, tax or regulatory matters. We express no opinion with respect to the fairness of the amount or nature of the compensation to any of the Company’s officers, directors or employees, or any class of such persons, relative to the consideration to be received by the holders of the Shares (including Shares held in the form of ADSs) in the Scheme. We have not made any independent valuation or appraisal of the assets or liabilities of the Company, nor have we been furnished with any such valuation or appraisal. Our opinion does not address the relative merits of the Scheme as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. This opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof may affect this opinion and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this opinion.

We have acted as financial advisor to the Board of Directors of the Company in connection with the Scheme and will receive a fee for our services, a substantial portion of which is contingent upon the closing of the Scheme. In the two years prior to the date hereof, we have provided financial advisory and financing services for the Company, the Buyer and some of their respective affiliates and have received fees in connection with such services. Morgan Stanley may also seek to provide such services to the Buyer, the

APPENDIX 1A - FAIRNESS OPINION FROM MORGAN STANLEY TO THE BOARD

BidCo, the Company or their respective affiliates in the future and expects to receive fees for the rendering of these services. We are not acting as independent financial advisors in connection with the Scheme within the meaning of the Code or the Listing Manual of the Singapore Exchange Securities Trading Ltd. We assume that the Directors of the Company will, in accordance with the requirements of the Code, appoint an independent financial advisor in due course.

Please note that Morgan Stanley, together with its associated companies (the “Morgan Stanley Group”) is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Our securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. The Morgan Stanley Group, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of customers, in debt or equity securities or loans of the Company, the Buyer, or any other company, or in any currency or commodity, that may be involved in the Scheme, or in any related derivative instrument.

This opinion has been approved by a committee of Morgan Stanley investment banking and other professionals in accordance with our customary practice. This opinion is for the information of the Board of Directors of the Company and no other person and may not be used for any other purpose without our prior written consent. Morgan Stanley expresses no opinion or recommendation as to how the shareholders of the Company should vote at any shareholders’ meeting to be held in connection with the Scheme.

Based on and subject to the foregoing, we are of the opinion that as of the date hereof the Scheme Consideration to be paid to the holders of Shares (including Shares held in the form of ADSs) pursuant to the Scheme Implementation Agreement is fair from a financial point of view to such holders.

Very truly yours,

MORGAN STANLEY ASIA (SINGAPORE) PTE.


	By:

Jonathan Popper

Executive Director

APPENDIX 1B - FAIRNESS OPINION FROM CITI TO THE BOARD


3 Temasek Avenue		T 65 6432 1000
#17-00 Centennial Tower		F 65 6722 4200
Singapore 039190

September 7, 2009

The Board of Directors

Chartered Semiconductor Manufacturing Ltd.

60 Woodlands Industrial Park D, Street Two

Singapore, 738406

Members of the Board:

You have requested our opinion as to the fairness, from a financial point of view, to the holders (other than Temasek Holdings (Private) Limited and its affiliates) of the outstanding ordinary shares (the “Chartered Ordinary Shares”) in the capital of Chartered Semiconductor Manufacturing Ltd. (“Chartered”) and to the holders (other than Temasek Holdings (Private) Limited and its affiliates) of the American Depositary Shares of the Company, each of which represents ten Chartered Ordinary Shares (the “Chartered ADS” and, collectively with the Chartered Ordinary Shares, the “Chartered Securities”) of the Scheme Consideration (defined below) to be received by such holders pursuant to the terms and subject to the conditions set forth in a Scheme Implementation Agreement (the “Implementation Agreement”) proposed to be entered into between ATIC International Investment Company LLC and Chartered. As more fully described in the Implementation Agreement, all of the outstanding Chartered Securities will be transferred to ATIC International Investment Company LLC and, in consideration for such transfer and subject to the Scheme (as defined below) becoming effective, (i) each Chartered Ordinary Share will be entitled to receive S$2.68 in cash and (ii) each Chartered ADS will be entitled to receive approximately US$18.64 in cash (collectively, the “Scheme Consideration”).

In arriving at our opinion, we reviewed a draft dated September 5, 2009 of the Implementation Agreement and held discussions with certain senior officers, directors and other representatives and advisors of Chartered and certain senior officers and other representatives and advisors of ATIC International Investment Company LLC concerning the business, operations and prospects of Chartered. We examined certain publicly available business and financial information relating to Chartered as well as certain financial forecasts and other information and data relating to Chartered which were provided to or discussed with us by the management of Chartered. We reviewed the financial terms of the scheme of arrangement in respect of the Company under Section 210 of the Companies Act, Chapter 50 of Singapore as set forth in the Implementation Agreement (the “Scheme”) in relation to, among other things: current and historical market prices and trading volumes of Chartered Securities; the historical and projected earnings and other operating data of Chartered; and the capitalization and financial condition of Chartered. We considered, to the extent publicly available, the financial terms of certain other transactions which we considered relevant in evaluating the Scheme and analyzed certain financial, stock market and other publicly available information relating to the businesses of other companies whose operations we considered relevant in evaluating those of Chartered. In addition to the foregoing, we conducted such other analyses and examinations and considered such other information and financial, economic and market criteria as we deemed appropriate in arriving at our opinion. The issuance of our opinion has been authorized by our fairness opinion committee.

APPENDIX 1B - FAIRNESS OPINION FROM CITI TO THE BOARD

In rendering our opinion, we have assumed and relied, without independent verification, upon the accuracy and completeness of all financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with us and upon the assurances of the management of Chartered that they are not aware of any relevant information that has been omitted or that remains undisclosed to us. With respect to financial forecasts and other information and data relating to Chartered provided to or otherwise reviewed by or discussed with us, we have been advised by the management of Chartered that such forecasts and other information and data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Chartered as to the future financial performance of Chartered.

We have assumed, with your consent, that the Scheme will be consummated in accordance with the terms of the Implementation Agreement, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the Scheme, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Chartered or the Scheme. Representatives of Chartered have advised us, and we further have assumed, that the final terms of the Implementation Agreement will not vary materially from those set forth in the draft reviewed by us. We have not made or been provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Chartered nor have we made any physical inspection of the properties or assets of Chartered. We were not requested to, and we did not, solicit third party indications of interest in the possible acquisition of all or a part of Chartered, nor were we requested to consider, and our opinion does not address, the underlying business decision of Chartered to effect the Scheme, the relative merits of the Scheme as compared to any alternative business strategies that might exist for Chartered or the effect of any other transaction in which Chartered might engage. We also express no view as to, and our opinion does not address, the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation to any officers, directors or employees of any parties to the Scheme, or any class of such persons, relative to the Scheme Consideration. Our opinion is necessarily based upon information available to us, and financial, stock market and other conditions and circumstances existing, as of the date hereof. As you are aware, the credit, financial and stock markets are experiencing unusual volatility and we express no opinion or view as to any potential effects of such volatility on Chartered or ATIC International Investment Company LLC or the contemplated benefits of the Scheme.

Citigroup Global Markets Singapore Pte. Ltd. has acted as financial advisor to Chartered in connection with the proposed Scheme and will receive a fee for such services, a significant portion of which is contingent upon the consummation of the Scheme.

We and our affiliates in the past have provided, and currently provide, services to Chartered and certain of its affiliates and ATIC International Investment Company LLC and certain of its affiliates unrelated to the proposed Scheme, for which services we and such affiliates have received and expect to receive compensation, including, without limitation, (i) acting as joint bookrunner in Chartered’s offering of US$311 million of registered rights in April 2009, (ii) acting as financial advisor to Green Dot Capital Pte Ltd, a wholly owned subsidiary of Temasek Holdings (Private) Limited, in the sale of its stake in Singapore Computer Systems to Singapore Telecommunications Ltd. for S$140 million in August 2008 and (iii) acting as a lender under Chartered’s US$150 million credit facility in July 2009. In the ordinary course of our business, we and our affiliates may actively trade or hold the securities of Chartered and ATIC International Investment Company LLC for our own account or for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. In addition, we and our

APPENDIX 1B - FAIRNESS OPINION FROM CITI TO THE BOARD

affiliates (including Citigroup Inc. and its affiliates) may maintain relationships with Chartered, ATIC International Investment Company LLC and their respective affiliates.

Our advisory services and the opinion expressed herein are provided for the information of the Board of Directors of Chartered in its evaluation of the proposed Scheme, and our opinion is not intended to be and does not constitute a recommendation to any stockholder as to how such stockholder should vote or act on any matters relating to the proposed Scheme.

Based upon and subject to the foregoing, our experience as investment bankers, our work as described above and other factors we deemed relevant, we are of the opinion that, as of the date hereof, the Scheme Consideration is fair, from a financial point of view, to the holders of Chartered Securities (other than Temasek Holdings (Private) Limited and its affiliates).

Very truly yours,

CITIGROUP GLOBAL MARKETS SINGAPORE PTE. LTD.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

Deutsche Bank AG
Singapore Branch

One Raffles Quay
#17-00 South Tower
Singapore 048583

Tel +65 6423 8001
Fax +65 6538 2610 / 6538 2629

9 October 2009

The Independent Directors of
Chartered Semiconductor Manufacturing Ltd.
60 Woodlands Industrial Park D
Street 2
Singapore 738406

Dear Sirs,

PROPOSED ACQUISITION OF CHARTERED SEMICONDUCTOR MANUFACTURING LTD. BY ATIC INTERNATIONAL INVESTMENT COMPANY LLC BY WAY OF A SCHEME OF ARRANGEMENT UNDER SECTION 210 OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE

For the purpose of this letter, capitalised terms not otherwise defined herein shall have the same meaning given to them in the scheme document dated 9 October 2009 (“Scheme Document”) issued by Chartered Semiconductor Manufacturing Ltd. (the “Company” or “Chartered”) to its shareholders.


1.	INTRODUCTION

On 7 September 2009 (the “Announcement Date”), the respective boards of directors of the Company and ATIC International Investment Company LLC (the “Acquiror”) jointly announced the proposed acquisition (the “Acquisition”) of the Company by the Acquiror, a company incorporated in Abu Dhabi and wholly-owned by Advanced Technology Investment Company LLC (“ATIC”). ATIC is a technology investment company wholly-owned by the Government of Abu Dhabi. The Acquisition will be effected by way of a scheme of arrangement (the “Scheme”) under Section 210 of the Companies Act, Chapter 50 of Singapore and in accordance with the Singapore Code on Take-overs and Mergers (the “Code”).

Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and (i) subject to the approval of the SGX-ST, the Company will be delisted from the Official List of the SGX-ST and (ii) subject to the filing of a notification with the SEC and prior written notification to Nasdaq, the ADSs will be delisted from Nasdaq. The Company also intends to deregister the Company Shares and the ADSs with the SEC and terminate its reporting obligations under the Exchange Act. Conditional upon the Scheme becoming effective, the ADS Deposit Agreement will be terminated as at the Effective Date.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

Deutsche Bank AG, Singapore Branch (“Deutsche Bank”) has been appointed as the independent financial adviser to the Independent Directors in respect of the Scheme. This letter, which sets out our views and evaluation of the financial terms of the Scheme and our advice thereon to the Independent Directors, will form part of the Scheme Document.


2.	TERMS OF REFERENCE

We do not, by this letter, comment on or warrant the merits of the Scheme other than to form an opinion, for the purposes of compliance with Rules 7.1 and 24.1(b) of the Code, as to whether the financial terms of the Scheme are fair and reasonable.

In the course of our evaluation of the Scheme and for the purposes of our conclusion and advice, we have, amongst other things:


(a)	reviewed certain publicly available information collated by us including financial statements of the Company and other announcements made by the Company, information contained in the Scheme Document, as well as certain information provided and representations made to us by the Directors and management (“Management”) of the Company;

(b)	compared the financial performance of the Company and the prices and trading activity of its shares with those of certain other comparable publicly-traded companies;

(c)	reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

(d)	reviewed the reported historical prices and trading activity of the Company Shares over different observation periods;

(e)	reviewed publicly available analyst reports including recent target prices of the Company prior to the Announcement;

(f)	participated in discussions with representatives of the Company and its advisers with respect to the Scheme; and

(g)	performed such other analysis as we have deemed appropriate.

We have confined our evaluation to the financial terms of the Scheme. Our terms of reference do not require us to evaluate or comment on the strategic or commercial merits and/or risks of the Scheme or on the future prospects of the Company (or any of its related or associated companies). Such evaluation or comment, if any, remains the sole responsibility of the Directors and the Management although we may draw upon their views or make such comments in respect thereof (to the extent deemed necessary or appropriate by us and provided that such has been disclosed to us) in arriving at our view as set out in this letter. We were not requested or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to the Company Shares or the assets of the Company. We are therefore not addressing the relative merits of the Scheme as compared to any alternative transaction (if any) previously considered by the Company (or the Shareholders) or that otherwise may be available to the Company (or the Shareholders), or as compared to any alternative offer that might otherwise be available in the future.

We were neither a party to the negotiations entered into by the Company in relation to the Scheme nor were we involved in the discussions leading up to the decision on the part of the Directors to enter into the Implementation Agreement.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

The Directors have confirmed to us that, to the best of their knowledge and belief, all material information relating to the Company, the Group, the Scheme and the Scheme Document has been disclosed to us, that such information provided and representations made to us by the Directors and Management are true, complete and accurate in all material respects as at the Latest Practicable Date, and that there are no omissions of which would cause any information disclosed to us to be inaccurate, incomplete or misleading as at the Latest Practicable Date.

We have relied upon the assurances of the Directors that the Scheme Document has been approved by the Directors (including those who may have delegated detailed supervision of the Scheme Document). We have also relied upon such confirmation by the Directors and the assurances of the Directors made pursuant to the Directors’ responsibility statement set out in paragraph 20 of the Company’s Letter to Shareholders in the Scheme Document, that the Directors (including those who may have delegated detailed supervision of the Scheme Document) have taken all reasonable care to ensure that the facts stated and all opinions expressed in the Scheme Document (excluding those expressed in this letter, the IFA’s Letter on the Outlook and those expressed by or in relation to the Acquiror, ATIC and the FAs) are fair and accurate and that no material facts have been omitted. The Directors jointly and severally accept responsibility accordingly. Where any information provided to us has been extracted from published or publicly available sources, the responsibility of the Directors has been to ensure that having made reasonable inquiries, such information was accurately extracted from these sources, or as the case may be, reflected or reproduced in the Scheme Document.

We have relied upon certain publicly available information relating to the Company and the accuracy and completeness of all information given to us by the Directors and Management and have not independently verified such information, whether written or verbal, and accordingly cannot and do not represent or warrant, expressly or implied, and do not accept any responsibility for, the accuracy, completeness or adequacy of such information.

We are not required to express, and we do not express, any view on the growth prospects, earnings potential or valuation of the Company. We are therefore not expressing any view herein as to the prices at which the Company Shares may trade assuming the absence of the Scheme or if the Scheme is not effected.

We have not made any independent evaluation or appraisal of the assets and liabilities of the Company or the Group and we have not been furnished with any such independent evaluation or appraisal. Accordingly, no representation or warranty, express or implied, is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of all such information, provided or otherwise made available to us or relied on by us.

The preparation of this letter, our financial evaluation of the Scheme and our opinion in this letter are based upon market, economic, industry, monetary and other conditions prevailing as at 1 October 2009 (the “Latest Practicable Date”), as well as publicly available information and information provided to us by the Company and its advisors as at the Latest Practicable Date. Such conditions may change significantly over a relatively short period of time. Shareholders should further take note of any announcements relevant to their consideration of the Scheme which may be released by the Company and/or the Acquiror after the Latest Practicable Date. In arriving at our view, we have taken into account certain other factors and have been required to make certain assumptions. We assume no responsibility to update, revise or reaffirm our opinion in light of any subsequent development after the Latest Practicable Date that may affect our opinion contained herein.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

In rendering our advice and giving our opinion, we did not have regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his or her investment objectives or portfolio should consult his or her stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

The Company has been separately advised by its own advisers in the preparation of the Scheme Document (other than this letter and the IFA’s Letter on the Outlook). We have had no role or involvement and have not provided any advice, financial or otherwise, whatsoever in the preparation, review and verification of the Scheme Document (other than this letter and the IFA’s Letter on the Outlook). Accordingly, we take no responsibility for and express no views, express or implied, on the contents of the Scheme Document (other than this letter and the IFA’s Letter on the Outlook).

This letter is addressed to the Independent Directors solely for their benefit in connection with and for the purposes of their consideration of the Scheme, and the recommendations made by them to Shareholders with regard to the Scheme shall remain the responsibility of the Independent Directors. Our opinion should not, in any event, be relied on as a recommendation to any Shareholder (including any ADS Holder) as to how they should vote on the resolution in relation to the Scheme or any matters related thereto.

Our advice in relation to the Scheme should be considered in the context of the entirety of this letter and the Scheme Document.


3.	THE SCHEME

The following is a summary of certain key terms of the Scheme. Shareholders are advised to refer to paragraph 2 of the Company’s Letter to Shareholders and paragraph 2 of the Explanatory Statement in the Scheme Document for more details on the Scheme.


3.1	Terms of the Scheme

Terms. Under the Scheme:


(a)	all the Scheme Shares held by Entitled Shareholders will be transferred to the Acquiror:


	(i)	fully paid;

	(ii)	free from all Encumbrances; and

	(iii)	together with all rights, benefits and entitlements as at the Announcement Date and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) which may be announced, declared, paid or made by the Company on or after the Announcement Date; and

(b)

in consideration for such transfer, and upon and subject to the Scheme becoming effective, each Entitled Shareholder will be entitled to receive from the Acquiror the Scheme Consideration, being S$2.68 in cash for each Scheme Share, provided that if any dividend or distribution with respect to the Company Shares is declared or announced on or after the Announcement Date, and such dividend or distribution is paid or made to holders of the Company Shares of record as at any date that is on or prior to the Effective Date, the Scheme Consideration shall be reduced by the amount of such dividend or distribution; and

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

(c)

ADS Holders will be entitled to receive their consideration from the ADS Depositary in accordance with the terms of the ADS Deposit Agreement. Based on the prevailing exchange rate from Bloomberg L.P. on the Latest Practicable Date of S$1.4138 to US$1, the equivalent amount of consideration for each ADS is approximately US$18.96, less the applicable ADS Depository’s fees, taxes and expenses. The actual amount per ADS that ADS Holders will receive will depend on the applicable prevailing exchange rate at the time of conversion by the ADS Depository of the Scheme Consideration from Singapore Dollars to United States Dollars and the amount of applicable ADS Depository’s fees, taxes and expenses.

Scheme Consideration. The Scheme Consideration was arrived at after arm’s length negotiations between the Company and the Acquiror, on a willing-seller, willing-buyer basis, after taking into consideration, amongst other things, the recent market price of the Company Shares.

Scheme Shares. The Scheme will be extended, on the same terms and conditions to:


(a)	all Company Shares, including Company Shares represented by ADSs; and

(b)	all new Company Shares unconditionally issued or to be issued on or before the Books Closure Date pursuant to (i) the valid exercise of any Options, (ii) the vesting of any awards under the RSU Plan, (iii) the vesting of any awards under the PSU Plan, (iv) the valid conversion of any CRPS into new Company Shares and (v) the valid exercise by GS of the GS Option.

For the purpose of the Scheme, the expression “Scheme Shares” shall include all existing Company Shares and such new Company Shares.


3.2	Principal Terms of the Implementation Agreement

Scheme Conditions. The Scheme is conditional upon the satisfaction (or where applicable, waiver) of the Scheme Conditions (as set out in Appendix 5 to the Scheme Document). The Scheme will only become effective and binding if all the Scheme Conditions have been satisfied (or, where applicable, waived) and provided neither the Company nor the Acquiror exercises its Termination Right (if any). Shareholders should note that if any of the Scheme Conditions are not satisfied, the Scheme may not become effective.

Termination Right. The Implementation Agreement may be terminated by either Party at any time on or prior to the Record Date (provided that the Party seeking termination does so only after it has had prior consultation with the SIC), and on the grounds as set out in paragraph 3.3 of the Company’s Letter to Shareholders in the Scheme Document.

Fee. The Company shall pay the Acquiror a sum equal to S$25,375,176.64 (the “Fee”) in the events as set out in paragraph 3.9 of the Company’s Letter to Shareholders in the Scheme Document (the “Break Fee Events”), provided that the Company shall not be obliged to pay any amount which the SIC determines would not be permitted by Rule 13 of the Code. The maximum amount payable by the Company in relation to the Break Fee Events shall not exceed an amount equal to the Fee.

Others. Other principal terms and conditions of the Implementation Agreement are set out in paragraph 3 of the Company’s Letter to Shareholders in the Scheme Document, including, but not limited to:


(a)	the Matching Right conferred upon the Acquiror as set out in paragraph 3.5 of the Company’s Letter to Shareholders in the Scheme Document;

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


(b)	the Switch Option conferred upon the Acquiror as set out in paragraph 3.6 of the Company’s Letter to Shareholders in the Scheme Document;

(c)	the non-solicitation obligations of the Company as set out in paragraph 3.7 of the Company’s Letter to Shareholders in the Scheme Document;

(d)	certain restrictions on the Acquiror from acquiring or making an offer to acquire, Company Shares or Company Convertible Securities, or entering into any agreement, arrangement or understanding with any person in relation to any of the foregoing, for certain specified periods, as set out in paragraph 3.8 of the Company’s Letter to Shareholders in the Scheme Document; and

(e)	the acceleration of all outstanding RSUs and PSUs granted under the RSU Plan and the PSU Plan and the undertaking by the Acquiror to make such payment for the Company Shares comprised in such accelerated RSUs and PSUs, as set out in paragraph 3.10 of the Company’s Letter to Shareholders in the Scheme Document.


3.3	The Preference Share Offer

Preference Share Offer. In connection with the Scheme, the Acquiror will make the Preference Share Offer to Preference Share Holders to purchase all the CRPS held by the Preference Share Holders. The consideration for each CRPS held by the Preference Share Holders will be an amount in cash equal to the Early Redemption Price to be determined by reference to the Effective Date as the determination date. By accepting the Preference Share Offer, each accepting Preference Share Holder will also consent to the amendment of Article 4A of the Articles in the manner as set out in paragraph 19.3 of the Company’s Letter to Shareholders in the Scheme Document.

Whilst the Preference Share Offer is conditional upon the Scheme becoming effective, the Scheme will not be conditional upon any level of acceptances received in relation to the Preference Share Offer.

For further details on the Preference Share Offer, please refer to paragraph 4 of the Company’s Letter to Shareholders in the Scheme Document and paragraph 3.1 of the Letter from the Acquiror to Shareholders in Appendix 3 to the Scheme Document. The terms and conditions of the Preference Share Offer will be despatched to the Preference Share Holders at the same time as the despatch of the Scheme Document.


3.4	Options

No proposal will be made to the holders of the Options.


3.5	The GS Option

In connection with the Acquisition, no offer or proposal to purchase the GS Option is required to be made. For further details on the GS Option, please refer to paragraph 5 of the Company’s Letter to Shareholders in the Scheme Document.


3.6	Irrevocable Undertakings

STS Irrevocable Undertaking. STS, which holds 586,752,688 Company Shares as at the Latest Practicable Date, representing approximately 62.28 per cent. of all the Company Shares, has entered into

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

the STS Irrevocable Undertaking, pursuant to which it has given an irrevocable undertaking to the Acquiror to, inter alia:


(a)	Vote in favour of the Scheme at the Court Meeting: vote or procure the voting of all its Company Shares (i) in favour of the Scheme at the Court Meeting and (ii) against any resolution or proposal to adjourn the Court Meeting, except in the event the Company seeks an adjournment of the Court Meeting for any reason described in paragraph 3.5.4 of the Company’s Letter to Shareholders in the Scheme Document or with the prior written consent of the Acquiror;

(b)	Accept the Offer: in the event the Acquiror validly exercises the Switch Option, (i) accept the Offer in respect of all its Company Shares not later than five business days after the despatch by or on behalf of the Acquiror of the formal document in relation to the Offer and (ii) not withdraw its acceptance of the Offer, without the prior written consent of the Acquiror; and

(c)	Vote in favour of the Special Resolution (1) and Special Resolution (2) at the EGM: to the extent permitted by applicable laws, vote or procure the voting of all its Company Shares (i) in favour of Special Resolution (1) and Special Resolution (2) at the EGM, and (ii) against any resolution or proposal to adjourn the EGM, except in the event the Company seeks an adjournment of the EGM where the Company seeks an adjournment of the Court Meeting for any reason described in paragraph 3.5.4 of the Company’s Letter to Shareholders in the Scheme Document or with the prior written consent of the Acquiror.

The STS Irrevocable Undertaking will continue to be binding on STS even if the Acquiror does not exercise the Switch Option in the event of a Superior Offer.

Further, STS has agreed to be bound by certain non-solicitation provisions during the term of the STS Irrevocable Undertaking, save for certain exceptions.

Management Executive Irrevocable Undertakings. Each of Chia Song Hwee (President and CEO of the Company) and George Thomas (the Chief Financial Officer of the Company) has entered into the Management Executive Irrevocable Undertaking pursuant to which each of them has given an irrevocable undertaking to the Acquiror on terms substantially similar to the STS Irrevocable Undertaking.

Further details of the STS Irrevocable Undertaking and the Management Executive Irrevocable Undertakings are set out in paragraph 6 of the Company’s Letter to Shareholders in the Scheme Document and paragraph 6 of the Explanatory Statement in the Scheme Document.

No other Irrevocable Undertakings. Save for the Irrevocable Undertakings, the Company understands from the Acquiror that none of the Acquiror, ATIC and any party acting in concert with them has received any other irrevocable undertakings from any other party to vote in favour of, or reject, the Scheme as at the Latest Practicable Date.


4.	INFORMATION ON THE ACQUIROR AND ATIC

General information on the Acquiror and ATIC is set out in paragraph 8 of the Company’s Letter to Shareholders in the Scheme Document, paragraph 8 of the Explanatory Statement in the Scheme Document and Schedule A to Appendix 3 to the Scheme Document.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


5.	INFORMATION ON THE COMPANY

General information on the Company is set out in paragraph 7 of the Company’s Letter to Shareholders in the Scheme Document, paragraph 7 of the Explanatory Statement in the Scheme Document and Appendix 4 to the Scheme Document.


6.	RATIONALE FOR THE SCHEME AND FUTURE PLANS FOR THE COMPANY

The rationale for the Acquisition and the future plans for the Group are set out in paragraph 9 of the Company’s Letter to Shareholders in the Scheme Document.


7.	FINANCIAL ASSESSMENT OF THE SCHEME

In assessing the fairness and reasonableness of the financial terms of the Scheme from a financial point of view as at the Latest Practicable Date, we have considered the following factors which we consider to be pertinent and to have a significant bearing on our assessment:


(a)	trading comparable analysis to assess the valuation multiples implied by the Scheme Consideration in comparison with trading multiples of comparable companies;

(b)	precedent transaction analysis to assess the valuation multiples implied by the Scheme Consideration in comparison with multiples of similar control transactions;

(c)	share price analysis to assess how the Scheme Consideration compares to the historical share price of the Company over different observation periods;

(d)	comparison of the Scheme Consideration to the average analyst target prices for the Company prior to the Announcement; and

(e)	precedent take-over analysis to compare the premium/discount of the Scheme Consideration over the historical share price of the Company to selected take-over offer transactions in Singapore.

We wish to highlight that the figures used in our analysis in this section have been extracted from, inter alia, Bloomberg, Datastream, FactSet, Factiva, SGX-ST filings, Thomson Financial and relevant public documents of those respective companies as at the Latest Practicable Date. We make no representations or warranties, express or implied, on the accuracy or completeness of such information. The Independent Directors should note that the generally accepted accounting principles (“GAAP”) used by the respective comparable companies may be different. The differences between US GAAP used by the Company and the respective GAAP used by the comparable companies may therefore render comparisons between these companies less useful than if they all used the same GAAP. In addition, the comparable companies are not exactly identical to the Company in terms of location, business mix, financial performance, scale, geographical spread and track record. Any conclusions drawn from comparisons made may therefore not necessarily reflect the possible market valuation for the Company.

The evaluation parameters are discussed in greater detail in the ensuing paragraphs.


(a)	Trading comparable analysis

We recognise that there are no listed companies directly comparable to the Company in terms of composition of business activities, scale of operations, geographical spread of activities, track record and future prospects.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

However, reference can be made to listed companies that are considered broadly comparable to the Company to provide an indication of the current market expectations with regard to the valuation of these businesses.

Accordingly, for our evaluation, we have considered:


(i)	Price to net tangible book value⁽¹⁾ per share (“P/BV”);


(ii)	Enterprise value (“EV”) to normalised⁽²⁾ earnings before interest, tax, deprecation and amortisation (“EBITDA”) for the last twelve months (“EV/LTM EBITDA”); and

(iii)	EV to revenue (“Revenue”) for the last twelve months (“EV/LTM Revenue”).

As the majority of the selected comparable companies we have analysed have made a net operating loss and/or a net loss for the last twelve months, other typically used metrics such as EV to normalised earnings before interest and tax and price to earnings per share have not been used.

The companies which we have selected as trading comparables in the list below are a representative sample of top-tier, pure-play semiconductor foundry companies. The Independent Directors should note that these comparable companies will not be directly comparable with the Company as they operate in different geographies, have varying sizes, business mix and technological capabilities within the semiconductor foundry sector. Accordingly, these differences will impact relative growth rates, leverage, profit margins, and return on capital. In addition, the valuations of these companies will be impacted, amongst other factors, by the state of their respective capital markets, liquidity of their respective shares, and their respective tax regimes, accounting standards and disclosures.

⁽¹⁾ Adjustments made to tangible book value for goodwill and other intangible assets.

⁽²⁾ Adjustments made for revenues and expenses that are deemed to be not in the normal course of business, and/or are non-recurring in nature.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

The following is a brief description of the companies we have considered in our analysis:

Description of trading comparables


		Market Cap
Company	Company description	(S$mn)
United Microelectronics Corporation (“UMC”)	UMC, together with its subsidiaries, manufactures and sells advanced process integrated circuits (“ICs”) for applications spanning various sectors of the semiconductor industry in Taiwan. It develops system-on-chip (“SOC”) ICs for various applications, including copper interconnects, low-k dielectrics, embedded DRAM, and mixed signal/radio frequency complementary metal oxide semiconductor (“CMOS”). UMC also offers foundry services and mask tooling services. The company was founded in 1980 and is headquartered in Hsinchu City, Taiwan with additional offices in Japan, Singapore, Europe, and the United States.		9,125

Semiconductor Manufacturing International Corporation (“SMIC”)	SMIC, together with its subsidiaries, engages in the computer-aided design, manufacture, packaging, testing, and trade of integrated circuits. It provides wafer fabrication services and manufactures logic, mixed-signal and radio frequency, high voltage, memory, and specialty semiconductors. It serves integrated device manufacturers, fabless semiconductor companies, and systems companies. The company has a strategic partnership agreement with Toppan Printing Co., Ltd. and strategic cooperation agreement with Datang Telecom Technology & Industry Holdings Co., Ltd. SMIC sells its products and services in the United States, Europe, Taiwan, Japan, and the Asia Pacific. The company was founded in 2000 and is headquartered in Shanghai, the People’s Republic of China.		1,487

Taiwan Semiconductor Manufacturing Company (“TSMC”)	TSMC engages in the manufacturing, selling, packaging, testing, and computer-aided designing of various integrated circuits and other semiconductor devices, as well as manufacturing of masks. It offers a range of wafer fabrication processes, logic semiconductors and memory semiconductors. The company also offers a range of design services. TSMC serves primarily fabless semiconductor companies/systems companies and integrated device manufacturers in North America, Asia, and Europe. TSMC was founded in 1987 and is headquartered in Hsinchu, Taiwan.		73,192


Note: Market capitalization in S$ as at the Latest Practicable Date and translated at the relevant spot exchange rate as at that date

Source: Company filings, Company websites

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

Based on our research, and after discussion with the Management, we further believe that of the comparable companies that we have selected, UMC and SMIC (the “Comparable Company Subset”) can be regarded as the most directly comparable companies to the Company, given TSMC’s market leadership position and superior margins and cash flows. The Independent Directors should note that any comparison made with respect to the selected companies considered to be broadly comparable to the Company serves as an illustrative guide only. The Independent Directors should also note that none of the selected comparable companies are the subject of a take-over offer or take private transaction.

For illustrative purposes only, the EV/LTM Revenue, EV/LTM EBITDA and P/BV multiples of broadly comparable companies together with certain other financial information are set out in the table below:

Comparable companies trading analysis

Normalized enterprise

value / Last twelve

Second

Enterprise

Market

% of

months (“LTM”)

Quarter 2009

value^(a)

Capitalization^(b)(c)

52 week

(S$mn)

high

Revenue (x)

EBITDA (x)

P/BV (x)

Leading Edge Foundries

UMC

7,651

9,125

2.15

6.4

1.09

SMIC

2,518

1,487

1.68

4.4

0.48

Mean (UMC and SMIC only)

1.91

5.4

0.78

TSMC

62,988

73,192

100

5.29

9.3

3.90

Mean (all)

3.04

6.7

1.82

Chartered - offer price of S$2.68

4,489

2,525

100

2.26

9.5

1.11


LTM comparable company financial analysis
									FCF as			Net						Total		Net
	Revenue		Revenue			EBITDA			a % of			income						debt^(a)/		debt^(a)/
	(S$mn)		growth			margin			revenue^(d)			margin			ROIC^(e)			EBITDA (x)		EBITDA (x)
Leading Edge Foundries


UMC		3,559		(28	%)		33	%		26	%		(18	%)		(5	%)		0.4		Net cash


SMIC		1,501		(29	%)		38	%		(6	%)		(40	%)		(8	%)		2.8		1.7

Mean (UMC and SMIC only)				(29	%)		36	%		10	%		(29	%)		(6	%)		1.6		1.7



TSMC		11,912		(24	%)		57	%		44	%		26	%		27	%		0.1		Net cash


Mean (all)				(27	%)		43	%		21	%		(11	%)		5	%		1.1		1.7



Chartered		1,989		(9	%)		24	%		(13	%)		(20	%)		(6	%)		6.4		4.1


Notes:
LTM as of 30 June 2009
Normalized EBITDA adjusted for one-off gains or charges. Tangible book value adjusted for goodwill and other intangible assets
(a) Total debt and net debt as of 30 June 2009
(b) Market capitalization calculated based on the closing price as at the Latest Practicable Date and diluted shares outstanding (treasury method) as at the Latest Practicable Date. All relevant information has been converted into S$ based on the spot exchange rate as at the Latest Practicable Date
(c) Chartered’s market capitalization is calculated based on the Scheme Consideration and diluted shares outstanding (treasury method) as at the Latest Practicable Date
(d) FCF means free cash flow, which is derived from the formula EBITDA – capital expenditure
(e) ROIC means return on invested capital which is derived from the formula (LTM earnings before interest after tax) / (second quarter 2009 net debt + minority interest + shareholder’s equity)

Source: Company filings, Datastream

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

The chart below sets out the trading valuation statistics of the companies evaluated on a Last Twelve Month (“LTM”) basis (as of 30 June 2009) based on the closing price of the Company Shares on the Latest Practicable Date as compared to the equivalent Company statistics based on the Scheme Consideration.

As set out in the charts above, the Independent Directors should note that at the Scheme Consideration:


	n	The implied P/BV multiple is at a premium to the equivalent multiple of the Comparable Company Subset;


	n	The implied EV/LTM Revenue multiple is at a premium to the equivalent multiple of the Comparable Company Subset; and


	n	The implied EV/LTM EBITDA multiple is at a premium to the equivalent multiple of the Comparable Company Subset.

The Independent Directors should, however, note that valuations in different geographic markets are impacted by, amongst other things, economic conditions prevalent in those markets, cost of capital, liquidity and political environment amongst other market-centric factors so they may not be directly comparable to the Company.


(b)	Precedent transaction analysis

We have restricted our analysis to transactions in the last three years involving foundries including both whole company and minority investments. We have excluded transactions where key data points are not available in the public domain. We have conducted our analysis on the basis of P/BV, EV/Revenue and EV/EBITDA multiples. P/BV is the key parameter for the comparison to the multiples implied by the Scheme Consideration.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

As some of the transactions evaluated in our analysis relate to private companies, or divisions of public companies, not all the relevant data points are available in the public domain. The following are brief profiles on the companies selected for our analysis.


		Stake
Target	Target description	acquired
SMIC	SMIC, together with its subsidiaries, engages in the computer-aided design, manufacture, packaging, testing, and trade of integrated circuits. It provides wafer fabrication services and manufactures logic, mixed-signal and radio frequency, high voltage, memory, and specialty semiconductors. It serves integrated device manufacturers, fabless semiconductor companies, and systems companies. The company has a strategic partnership agreement with Toppan Printing Co., Ltd. and strategic cooperation agreement with Datang Telecom Technology & Industry Holdings Co., Ltd. SMIC sells its products and services in the United States, Europe, Taiwan, Japan, and the Asia Pacific. The company was founded in 2000 and is headquartered in Shanghai, the People’s Republic of China.	16%


GLOBALFOUNDRIES	GLOBALFOUNDRIES, a silicon foundry, provides outsourced semiconductor manufacturing services. It also engages in the research, development, and design enablement of semiconductors for integrated device manufacturers, fabless, or original equipment manufacturer enterprises. The company offers automated precision and lean manufacturing, wafer fabrication, and supply chain management services. Its products include silicon on insulator integrated circuits, silicon chips, and microprocessors. The company has strategic partnerships with Qimonda and Fraunhofer-Gesellschaft. GLOBALFOUNDRIES was founded in 2009 and is headquartered in Sunnyvale, California. It has semiconductor production facilities in Dresden, Germany; Malta and Hopewell Junction, New York; and Austin, Texas.	66%


Jazz Technologies Inc.	Jazz Technologies Inc., formerly known as Acquicor Technology Inc., is an independent semiconductor foundry that provides process technologies, design solutions, and application knowledge for the manufacture of analog and mixed-signal semiconductors. It offers specialty process technologies; design platform for analog and mixed-signal semiconductors; and specialty process technologies, including analog CMOS, radio frequency CMOS, high voltage CMOS, BiCMOS, and SiGe BiCMOS processes. The company’s analog and mixed-signal semiconductor devices are used in cellular phones, wireless local area networking devices, digital TVs, set-top boxes, gaming devices, switches, routers, and broadband modems. Jazz Technologies Inc. also provides circuit design, photo mask making, wafer fabrication, probe, and assembly and test services.	100%

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


		Stake
Target	Target description	acquired

Hitachi Semiconductor Singapore Pte Ltd (“Hitachi Semiconductor”)	Hitachi Semiconductor manufactures semiconductor devices. The company offers wafers, drivers for liquid crystal displays used in handphones, flash memory products, micro controller devices for automotive manufacturers, and integrated circuit card devices used in banking and subscriber identity module cards. It also provides dynamic random access memory, flash, and logic devices used in personal computers, servers, handphones, personal digital assistants, DVD recorders, car engine controls, and security products. In addition, the company offers testing services, as well as foundry services to semiconductor manufacturers.	100%


Jazz Semiconductor Inc.	Jazz Semiconductor, Inc., an independent semiconductor foundry company, focuses on specialty process technologies for the manufacture of analog and mixed-signal semiconductor devices. It provides an array of specialty process technologies and design solutions for the manufacture of analog and mixed-signal semiconductors. The company primarily manufactures semiconductor wafers for its customers; offers circuit design services; and provides photomask making, wafer fabrication services, wafer probe services, and assembly and test services. Its customers’ analog and mixed-signal semiconductor devices are designed for use in products such as cellular phones, wireless local area networking devices, digital TVs, set-top boxes, gaming devices, switches, routers, and broadband modems. The company serves customers targeting wireless, optical networking, power management, storage, aerospace/defense, and other high performance applications primarily in the United States. The company was founded in 2002.	100%


Source: Company filings, Company websites

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

The table below details the valuation metrics at which precedent transactions have been completed. For illustrative purposes only, the EV/LTM Revenue, EV/LTM EBITDA and P/BV multiples of broadly comparable companies together with certain other financial information are set out in the table below:

(S$mn)

Transaction value

Enterprise value /

Announced

Stake

Price /

LTM

date

Target

Acquirer

acquired

Equity

Enterprise

Book

Revenue

EBITDA

10 Nov 08

SMIC^(a)

Datang
Holdings

16.0

256

0.32

7 Oct 08

GLOBALFOUNDRIES^(a)(b)

ATIC

65.8

2,627

1.11

20 May 08

Jazz Technologies

Tower
Semiconductor

100.0

230

0.82

0.80

6.5

15 Feb 08

Hitachi Semiconductor

Chartered

100.0

344

335

0.97

1.23

26 Sep 06

Jazz Semiconductor

Acquicor
Technology^(c)

100.0

413

369

0.99

1.17

8.4

All transaction mean:

0.84

1.07

7.4

Transaction mean for 100% acquisitions:

0.93

1.07

7.4

7 Sep 09

Chartered^(d)

ATIC

100.0

2,525

4,489

1.11

2.26

9.5

Notes:

Tangible book value adjusted for goodwill and other intangible assets. Normalized EBITDA adjusted for one-off gains or charges

Exchange rate based on announcement date for each transaction

NM is shown when the values are not meaningful

NA is shown when the figures are not available

Net debt as of latest available balance sheet prior to announcement of transaction

(a) Transactions are not directly comparable due to less than 100 per cent. stake acquired; GLOBALFOUNDRIES transaction also included a long term supply contract with the seller, Advanced Micro Devices (“AMD”), who also retained a 34.2 per cent. stake, assuming full conversion of convertible instrument held by ATIC

(b) Transaction multiple calculated on value received by AMD consisting of pro-forma ownership in Series A preferred shares in GLOBALFOUNDRIES and cash received for Series B preferred shares. Excludes impact of ATIC’s cash investment into GLOBALFOUNDRIES. ATIC ownership shown post cash investment and assumes full conversion of convertible instrument held by ATIC

(d) Exchange rate based on the Latest Practicable Date

Source: Company filings, Analysts’ reports

The Independent Directors should note that P/BV, EV/Revenue and EV/EBITDA multiples indicate that the equivalent Company multiples implied by the Scheme Consideration are at a premium to the mean multiples of the selected precedent transactions set out above.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


(c)	Share price analysis

We set out in the chart below, the closing price⁽³⁾ and daily trading volume of the Company Shares for the 12 months preceding the Announcement Date.

The Company Shares have traded in a band between S$0.70 and S$2.98 (as adjusted for the rights issue and share consolidation) over the 12 month period prior to Announcement Date. The last time the price traded at or above the Scheme Consideration was on 26 September 2008.

As at the Latest Practicable Date, the Company had a free float⁽⁴⁾ of approximately 37.7 per cent. The Independent Directors should also note that the average daily trading volume on the SGX-ST of the Company Shares is approximately 3,460,715 Company Shares per day during the 12 months preceding the Announcement Date and that the free float turned 2.46 times during this period⁽⁵⁾.

The Independent Directors should note that on 29 May 2009, the Singapore Business Times reported on a possible acquisition by ATIC of the Company Shares held by STS at a price of

⁽³⁾ The closing price of the shares has been adjusted for the rights issue which closed on 16 April 2009 and share consolidation on 18 May 2009.

⁽⁴⁾ Free float is calculated based on those Shareholders that have not provided irrevocable undertakings in connection with the Scheme.

⁽⁵⁾ Based on the total number of Company Shares in issue of 942,060,579 as at the Latest Practicable Date.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

between S$2.40 and S$2.60 per share (the “SBT Article”). This report was followed by a holding announcement by the Company on the same day together with sustained media and broker commentary in the following days. This information may have been incorporated into the price of the Company Shares on the SGX-ST prior to the Announcement Date such that 28 May 2009 (the trading day immediately prior to the SBT Article) can be considered the “Unaffected Price Date”.

The Scheme Consideration represents a 23 per cent. premium to the latest traded price of S$2.18 as at the Unaffected Price Date.

Since the Announcement Date to the Latest Practicable Date, the Company’s closing share price has traded in a band between S$2.58 and S$2.62. We note that the daily closing price of the Company Shares has not closed above the Scheme Consideration since the Announcement Date to the Latest Practicable Date. This suggests that the market may be generally supportive of the Scheme and that no competing bidders are expected. However, this support also needs to be considered in terms of the comments below in section 8 on “Other Considerations” of this letter.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


(d)	Analysts’ estimates of price targets for the Company Shares

In our assessment of the Scheme Consideration, we have considered analysts’ expectations of the future price performance of the Company Shares. For this purpose, we have reviewed publicly available investment research reports issued on the Company to ascertain the price targets for the Company Shares estimated by these analysts as set out in Bloomberg. There were a total of 18 institutions which had issued investment research reports on the Company (after the release of the Company’s first quarter 2009 earnings on 24 April 2009 and prior to the Announcement Date) and which set price targets for the Company Shares. We set out below a summary of the price targets for the Company Shares set out in these reports.

We note that the Scheme Consideration is at a premium of approximately 31 per cent. over the mean of the analysts’ target price of S$2.05.

We wish to highlight that the aforementioned price targets for the Company Shares represent the individual views of the respective analysts based on then prevailing circumstances (including market conditions and

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

economic outlook) as at the date of publication. The analysts’ views and/or price targets may change materially over a short period of time as a result of, among other things, changes in general market conditions, the Company’s corporate developments and emergence of other new developments or information relevant to the Company and/or its industry. The price targets for the Company Shares quoted by these analysts may not necessarily represent an accurate prediction of the future market prices of the Company Shares. The Independent Directors should note that the information above should not be relied upon as a promise or indication of the actual future market prices of the Company Shares.


(e)	Precedent take-over analysis

We set out in the table below the premium/discount implied by the offer price of other take-over transactions in Singapore to the closing prices of the respective targets for the 1-day, 1-month, 3-month and 6-month periods prior to the respective offer announcements. We have selected transactions up to the Latest Practicable Date, where the transaction size implied by the respective offers was greater than S$100 million and resulted in the offeror acquiring control (greater than 50 per cent. equity ownership in the target entity where they had less than 50 per cent. equity ownership in the target entity prior to the offer).

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


				Premium / (discount) of offer
				price^(a) to share price prior
				to announcement
					Volume-weighted
					average price
			Announced		(“VWAP”)^(c)
Announced			value
date	Target	Acquirer	(S$mn)	1-day^(b)	1-mth	3-mths	6-mths


24 May 09	Singapore Petroleum	PetroChina	3,221	24%	51%	90%	121%

02 Dec 08	Singapore Food Industries^(d)	Singapore Airport Terminal Services	509	26%	22%	21%	19%

25 Aug 08	Singapore Computer Systems	Singapore Telecommunications	238	56%	70%	70%	68%

10 Jul 08	GMG Global^(e)(f)	Sinochem International	268	57%	58%	64%	74%

10 Jun 08	SNP Corporation^(g)	Toppan Printing	209	39%	40%	47%	48%

07 Jun 08	Unisteel Technology^(h)(i)	Latch Holding (Labuan)	785	44%	45%	45%	28%

04 Feb 08	AsiaPharm^(j)	LuYe Pharmaceutical Investment	276	30%	34%	33%	28%

20 Jan 08	Robinson and Company^(k)	ALF Global	619	64%	65%	60%	54%

06 Jan 08	Straits Trading Company^(l)	The Cairns	1,452	35%	31%	35%	42%

07 Dec 07	Sincere Watch^(m)	A-A United	530	10%	19%	33%	38%

05 Dec 07	Frontline Technologies^(h)	BT Singapore	202	29%	34%	38%	38%

29 Oct 07	Labroy Marine	Dubai Drydocks World	2,358	3%	9%	20%	18%

08 Aug 07	ECS Holdings	VST Holdings	244	6%	10%	13%	20%

27 Jun 07	United Test and Assembly Center^(h)(n)	Global AT&T Electronics	1,804	32%	30%	31%	37%

13 Jun 07	Sembawang Kimtrans^(o)	Toll Express (Asia)	326	13%	14%	15%	16%

28 May 07	Pan United Marine	Dubai Drydocks World	648	3%	14%	22%	33%

22 May 07	Amtek Engineering^(p)	Metcomp Co (Singapore)	262	41%	50%	59%	66%

05 Apr 07	MMI Holdings^(h)(q)	Precision Capital	1,005	16%	28%	44%	62%

04 Mar 07	RSH	Golden Ace	370	(13%)	15%	42%	44%

01 Mar 07	STATS ChipPAC^(o)	Singapore Technologies Semiconductors	1,842	18%	23%	33%	47%

08 Jan 07	Guthrie GTS^(r)	Alam Indah Bintan	164	16%	20%	32%	38%


			Minimum	(13%)	9%	13%	16%

			Mean	26%	32%	40%	45%

			Median	26%	30%	35%	38%

			Maximum	64%	70%	90%	121%


7 Sep 09	Chartered^(s)	ATIC	2,525	1%	13%	19%	44%

	Chartered^(t)	ATIC	2,525	23%	41%	64%	62%


Source: Bloomberg, Company filings, Factiva

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME



		Notes:

		(a)		Offer price based on final bid price per share

		(b)		Last transacted price before the announcement of the relevant transaction or the possibility of the relevant transaction

		(c)		Volume-weighted average share price for the 1-month, 6-month and 12-month periods up to and inclusive of day before announcement of the offer, which is computed as the sum of trading value divided by the sum of trading volume for the respective relevant periods

		(d)		Premium calculated with reference to 21 October 2008, being the last full day of trading prior to the query by the SGX-ST regarding a substantial increase in the price of shares in Singapore Food Industries Limited (“SFI”). On 23 October 2008, SFI announced that Ambrosia Investment Pte. Ltd. was evaluating options in respect of its stake in SFI

		(e)		Partial offer

		(f)		Premium calculated with reference to 24 April 2008, being the last full day of trading of the shares prior to an unusual increase in the price and volume of traded shares in GMG Global Limited (“GMG Global”). On 10 July 2008, GMG Global announced the voluntary conditional cash partial offer for 51 per cent. of the issued and paid-up shares of GMG Global by Sinochem International (Overseas) Pte. Ltd.

		(g)		Premium calculated with reference to 17 April 2008, being the last trading day prior to SNP Corp Ltd’s (“SNP”) announcement that it had been informed by its majority shareholder, Green Dot Capital Pte Ltd (“Green Dot”) that Green Dot was evaluating options with respect to its 54 per cent. stake in SNP

		(h)		Scheme of arrangement

		(i)		On 16 April 2008, Unisteel Technology Ltd (“Unisteel”) replied to a query by the SGX-ST regarding the substantial increase in Unisteel’s share price on 15 April 2008 that Unisteel was in the preliminary stages of reviewing strategic options. On 7 June 2008, the proposed acquisition relating to Unisteel was announced. The market premia in the table above were computed with reference to 14 April 2008, being the last full day of trading prior to the query by SGX-ST on 15 April 2008

		(j)		Premium calculated with reference to 29 January 2008, being the last trading day prior to high trading volumes and substantial price increases in AsiaPharm Group Ltd shares, leading to a suspension of the shares on 31 January 2008 prior to the announcement date of 5 February 2008

		(k)		On 20 January 2008, ALF Global Private Ltd (“ALF”) announced its intention to make a voluntary conditional cash offer for the shares in the capital of Robinson and Company, Limited at a price of S$6.25. Subsequently, ALF increased the offer price to S$7.00 on 17 March 2008, and to S$7.20 on 3 April 2008. The bid premia in the table above were computed based on the final offer price of S$7.20 and market prices prior to the first offer announcement on 20 January 2008

		(l)		On 6 January 2008, Standard Chartered Bank on behalf of The Cairns Pte Ltd (“The Cairns”) announced its intention to make a voluntary conditional cash offer for the shares in the capital of The Straits Trading Company Limited at a price of S$5.70. Subsequently, The Cairns increased the offer price to S$6.50 on 28 January 2008, and to S$6.70 on 18 February 2008. The bid premia in the table above were computed based on the final offer price of S$6.70 and market prices prior to the first offer announcement on 6 January 2008. In computing the premium of the offer price over the last transacted price, the last transacted price on 4 January 2008 had been used

		(m)		On 7 December 2007, a pre-conditional offer for Sincere Watch Limited (“Sincere Watch”) was announced. The offer price for each Sincere Watch share was S$2.051 in cash and 0.228 new share in the capital of Peace Mark (Holdings) Limited (a company listed on Hong Kong Stock Exchange) at the issue price of HK$12.096 each (equivalent to S$2.246 at the exchange rate ratio of S$1.00: HK$5.385 as at 6 December 2007, being the date immediately preceding the pre-conditional offer), equivalent to a total

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME



				notional value of approximately S$2.563. The computations in the table above were based on such notional value and prices prior to 7 December 2007

		(n)		Premium calculated with reference to 1 June 2007, being the last trading day prior to the publication of the DBS Group research report saying that United Test and Assembly Center Ltd was a “good buyout candidate”

		(o)		2-tiered offer

		(p)		Premium calculated with reference to 13 April 2007, being the last full day of trading in the shares prior to the announcement on 16 April 2007 by Amtek Engineering Ltd (“Amtek Engineering”) announcing that certain shareholders, including a substantial shareholder and shareholders who are executive directors, have been approached in relation to possible transactions involving their shares in Amtek Engineering

		(q)		Premium calculated with reference to 8 February 2007, being the last trading day before MMI Holdings Ltd (“MMI”) announced it had received expressions of interest in relation to a potential transaction involving MMI

		(r)		On 28 February 2007, Kim Eng Capital Pte Ltd, on behalf of Alam Indah Bintan Pte Ltd (“Alam Indah Bintan”), announced its intention to make a voluntary conditional cash offer for the shares in the capital of Guthrie GTS Limited (“Guthrie”) at a price of S$0.395. Subsequently, Alam Indah Bintan increased the offer price to S$0.435 on 5 March 2007. The market premia in the table above were computed with reference to 28 December 2006, being the last full day of trading of the shares in Guthrie prior to the release of a holding announcement by Guthrie on 29 December 2006 released by Guthrie in relation to a possible offer for Guthrie. On 8 January 2007, the offer was announced by Kim Eng Capital Pte Ltd, on behalf of Alam Indah Bintan

		(s)		Based on the closing share prices as at the Pre-Announcement Date

		(t)		Based on the closing share prices as at the Unaffected Price Date

		Source: Bloomberg, Company filings, Factiva

The Scheme Consideration represents:


(i)	a premium of approximately 23 per cent. to the closing price of the Company Shares on the Unaffected Price Date and a premium of approximately 1 per cent. to the closing price of the Company Shares on the Pre-Announcement Date. This compares to a premium of 26 per cent. to the mean of the last trading price for the selected transactions;

(ii)	a premium of approximately 41 per cent. to the 1-month VWAP of the Company Shares prior to the Unaffected Price Date and a premium of approximately 13 per cent. to the 1-month VWAP of the Company Shares prior to the Pre-Announcement Date. This compares to a premium of 32 per cent. to the mean of the 1-month VWAP for the selected transactions;

(iii)	a premium of approximately 64 per cent. to the 3-month VWAP of the Company Shares prior to the Unaffected Price Date and a premium of approximately 19 per cent. to the 3-month VWAP of the Company Shares prior to the Pre-Announcement Date. This compares to a premium of 40 per cent. to the mean of the 3-month VWAP for the selected transactions; and

(iv)	a premium of approximately 62 per cent. to the 6-month VWAP of the Company Shares prior to the Unaffected Price Date and a premium of approximately 44 per cent. to the 6-month VWAP of the Company Shares prior to the Pre-Announcement Date. This compares to a premium of 45 per cent. to the mean of the 6-month VWAP for the selected transactions.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

The Independent Directors should note that the premium of the Scheme Consideration as at the Pre-Announcement Date is below the corresponding premium for the selected transactions for each period. However, it is in line with the corresponding premium for the 6-month VWAP which is the only period covered by the Pre-Announcement Date premium analysis which includes the Unaffected Price Date.

The premium of the Scheme Consideration as at the Unaffected Price Date is above each of the corresponding premium for the selected transactions other than the one-day premium.

The Independent Directors should note that the level of premium (if any) an acquirer would normally pay in a merger or take-over transaction will vary in different circumstances depending on, inter alia, the attractiveness of the underlying business to be acquired, the synergies to be gained from integration with an existing business to be acquired, the possibility of realisation of any significant revaluation of the assets to be acquired, the availability of substantial cash reserves, the liquidity in the trading of the target company’s shares, the presence of competing bids for the target company, the form of consideration offered by the acquirer, the extent of control the acquirer already has in the target company and prevailing market expectations.

It should be noted that the comparison is made without taking into consideration the relative efficiency of information or news flow on the Company prior to the announcement or the underlying liquidity of the shares of the relevant companies or the performance of the shares of the companies or the quality of earnings prior to the relevant announcement and the market conditions or sentiments when the announcements were made or the desire or relative need for control leading to compulsory acquisition. Moreover, as the Company is not in the same industries and does not conduct the same businesses as the other target companies in the table above, it may not, therefore, be directly comparable to the target companies in terms of composition of business activities, product lines, scale of operations, risk profile, geographical spread of activities, client base, accounting policies, track record, prospects and other relevant criteria. Accordingly, the Independent Directors should note that the above comparison merely serves as a general guide.


8.	OTHER CONSIDERATIONS

The Scheme is binding on all Shareholders

If the Scheme is approved by a majority in number of Shareholders present and voting, either in person or by proxy, at the Court Meeting, such majority holding not less than 75 per cent. in value of the Company Shares held by Shareholders present and voting at the Court Meeting, the Scheme will be binding on all Shareholders, regardless of whether they were present in person or by proxy or voted at the Court Meeting.

Other Conditions of the Scheme

The Independent Directors should note that besides the requisite approval of Shareholders at the Court Meeting, the Scheme is also subject to, inter alia, the fulfillment of certain conditions precedent and termination provisions. In the event that such conditions precedent are not fulfilled or waived or the termination provisions become applicable, the Scheme may not proceed. There is no assurance as at the Latest Practicable Date that the Scheme will become effective.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

Irrevocable Undertakings

As at the Latest Practicable Date, the Company Shares which are the subject of the STS Irrevocable Undertaking and the Management Executive Irrevocable Undertakings represent approximately 62.31 per cent. of all the Company Shares. The (i) STS Irrevocable Undertaking and (ii) the Management Executive Irrevocable Undertakings will continue to be binding on (i) STS and (ii) each of Chia Song Hwee and George Thomas respectively, even if the Acquiror does not exercise the Switch Option in the event of a Superior Offer. Further details of the Irrevocable Undertakings can be found in paragraph 6 of the Company’s Letter to Shareholders in the Scheme Document and paragraph 6 of the Explanatory Statement in the Scheme Document.

Switch Option

Pursuant to the terms of the Implementation Agreement, subject to prior consultation with the SIC, in certain circumstances, the Acquiror has the right at its discretion to elect to proceed with an Offer in lieu of proceeding with the Acquisition by way of the Scheme.

If the Acquiror validly exercises the Switch Option, the Acquiror shall make the Offer on the same or better terms as those set out in the Acquiror’s proposal to the Company when exercising the Matching Right. The acceptance condition of such Offer may be set at only more than 50 per cent. of the Company Shares (including Company Shares held in the form of ADSs), and not conditional on higher level acceptances.

Further details of the Switch Option are contained in paragraph 3.6 of the Company’s Letter to Shareholders in the Scheme Document.

Matching Rights for Superior Offer

Shareholders should note that the Company has provided ATIC with certain Matching Rights in the event that the Independent Directors, in the exercise of their fiduciary obligations, decide to recommend or announce their intention to recommend a Competing Offer.

Further details of the Matching Rights are contained in paragraph of 3.5 of the Company’s Letter to Shareholders in the Scheme Document.

Fee

As highlighted in section 3.2 of this letter above, the Company has agreed to pay the Acquiror a sum equal to S$25,375,176.64 in the Break Fee Events, such events including but not limited to, where the Independent Directors recommend a Competing Offer, the Company breaches any of its Material Obligations or if the Company entertains an Unsolicited Offer and the Shareholders’ approval of the Scheme is not obtained.

Further details of the Fee are contained in paragraph 3.9 of the Company’s Letter to Shareholders in the Scheme Document.

Third Party Proposals

The Directors have confirmed to us that, from the Announcement Date up to the Latest Practicable Date, no alternative offer for the Company Shares has emerged from a third party. There is also no publicly available evidence of any such alternative offer for the Company Shares.

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

Limitation on Subsequent Offer

Shareholders should note that in the event that the Scheme does not become effective, neither the Acquiror nor any persons acting in concert with them in the course of the Scheme nor any person who is subsequently acting in concert with any of them may (except with the SIC’s consent) within 12 months from the date on which the Scheme is withdrawn or lapses (i) announce an offer or possible offer for the Company or (ii) acquire any voting rights of the Company if the Acquiror or any persons acting in concert with them would thereby become obliged under Rule 14 of the Code to make an offer for the Company.


9.	CONCLUSION AND ADVICE

Shareholders should read the following in conjunction with, and in the context of, the full text of this letter. In arriving at our advice to the Independent Directors, we have relied upon the following key considerations:


(a)	the valuation multiples implied by the Scheme Consideration are at a premium to the trading levels of UMC and SMIC, which we consider to be the most comparable companies to the Company;

(b)	the valuation multiples implied by the Scheme Consideration are at a premium to the transaction multiples where a 100 per cent. stake was acquired;

(c)	the Scheme Consideration represents a 31 per cent. premium to the mean of the analysts’ target price of S$2.05⁽⁶⁾;


(d)	the Company Shares have traded in a band between S$0.70 and S$2.98 (on a rights issue and share consolidation adjusted basis) in the 12 month period prior to the Announcement;


(e)	on 29 May 2009, the Singapore Business Times reported on a possible acquisition by ATIC of Temasek’s shareholding in the Company. As such, the last traded price of the Company Shares on 28 May 2009 can be regarded as the “unaffected” share price prior to market speculation regarding a potential transaction;

(f)	the Scheme Consideration represents a 23 per cent. premium to the closing price on 28 May 2009, a 1 per cent. premium to the closing price on the Pre-Announcement Date and a 44 per cent. premium to the six-month VWAP prior to the Announcement Date;

(g)	following the Announcement, the Company Shares have traded in a band between S$2.58 and S$2.62, suggesting that the market does not expect any competing offer to be forthcoming;

(h)	the Company has confirmed to us that alternative strategic options were considered prior to the Announcement, including preliminary discussions with alternative partners, but the Company was of the view that none of these options represented as compelling a proposal as the Scheme;

(i)	the Company has confirmed to us the need for substantial, continued capital investment going forward. We note that the Company currently has the highest financial leverage⁽⁷⁾ of the comparable companies in its peer group;

⁽⁶⁾ Analyst target prices pre-Announcement for those analysts who have published target prices after the release of the Company’s first quarter 2009 earnings on 24 April 2009.

⁽⁷⁾ Financial leverage is defined as total debt / LTM EBITDA as at 30 June 2009

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME


(j)	Temasek⁽⁸⁾, the 62.28 per cent. majority shareholder of the Company, has provided an irrevocable commitment to ATIC to vote in favor of the Scheme; and

(k)	the Company has not been approached by any person since the Announcement with a competing offer.

Based upon, and having considered, inter alia, the factors described above and the information that has been made available to us as at the Latest Practicable Date, we are of the opinion that as at the Latest Practicable Date, the Scheme Consideration is fair and reasonable from a financial point of view. Accordingly, we would advise the Independent Directors to recommend that, in the absence of a superior offer, Shareholders should vote in favour of the Scheme.

In rendering our advice and giving our opinion, we did not have regard to the specific investment objectives, financial situation, tax position or particular needs and constraints of any individual Shareholder. As each Shareholder would have different investment objectives and profiles, we would advise the Independent Directors to recommend that any individual Shareholder who may require specific advice in relation to his or her investment objectives or portfolio should consult his or her stockbroker, bank manager, solicitor, accountant or other professional advisers immediately.

We wish to emphasise that our opinion is limited to the fairness and reasonableness of the Scheme from a financial point of view as at the Latest Practicable Date. Our terms of reference do not require us to express, and we do not express, an opinion on the future business and prospects of the Company or the Group.

The Independent Directors should also note that the trading of the Company Shares is subject to, inter alia, the performance and prospects of the Company and the Group, prevailing market conditions, economic outlook and stock market conditions and sentiments. Accordingly, this opinion does not and cannot take into account future trading activities, patterns or price levels that may be established for the Company Shares after the Latest Practicable Date, since these are governed by factors beyond the ambit of our review and also, such opinion, if given, would not fall within our terms of reference in connection with the Scheme.

This letter is addressed to the Independent Directors solely for their benefit, in connection with and for the purpose of their consideration of the financial terms of the Scheme and should not be relied on by any other party or for any other purpose. This letter does not constitute and should not be relied on as a recommendation to, or confer any rights or remedies upon, any Shareholder (including any ADS Holder) as to how such person should deal with or vote their Company Shares in relation to the Scheme or any matter related thereto. The recommendation made by the Independent Directors to the Shareholders in relation to the Scheme shall remain the sole responsibility of the Independent Directors.

Whilst a copy of this letter may be reproduced in the Scheme Document, neither the Company nor the Directors may reproduce, disseminate or quote this letter (or any part thereof) for any other purpose at any time and in any manner without the prior written consent of Deutsche Bank in each specific case.

⁽⁸⁾ Through its wholly-owned subsidiary Singapore Technologies Semiconductors Pte Ltd

APPENDIX 2 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS ON THE SCHEME

This letter is given for the purposes of compliance with the relevant Singapore laws and regulations and shall be governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Nothing herein shall confer or be deemed or is intended to confer any right or benefit to any third party and the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore and any amendments thereto shall not apply.

Yours faithfully,

For and on behalf of

Deutsche Bank AG, Singapore Branch



Sandeep Pahwa		Suneet Weling
Managing Director		Director

100

APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS

9 October 2009

To: The Shareholders of Chartered Semiconductor Manufacturing Ltd.

Dear Sir/Madam

PROPOSED ACQUISITION OF CHARTERED SEMICONDUCTOR MANUFACTURING LTD. BY WAY OF A SCHEME OF ARRANGEMENT


1.	INTRODUCTION

We refer to the proposed acquisition (the “Acquisition”) of Chartered Semiconductor Manufacturing Ltd. (the “Company”) by ATIC International Investment Company LLC (the “Acquiror”) by way of a scheme of arrangement (the “Scheme”) under Section 210 of the Companies Act (Chapter 50 of Singapore) (the “Companies Act”).

Terms used in this Letter have the same meanings and construction as those defined in the section entitled “Definitions” of the Scheme Document, unless otherwise indicated.


2.	THE SCHEME

The Acquiror is entering into the Scheme for the purposes of the Acquisition on the basis that, upon and subject to the Scheme becoming effective, the Company will be privatised and the Acquiror will be the sole shareholder of the Company.

The Scheme is subject to the Scheme Conditions which must be satisfied for the Scheme to be implemented. Details of these Scheme Conditions are set out in Paragraph 3.1 of the Company’s Letter to Shareholders in the Scheme Document. The Scheme Conditions are also reproduced in Appendix 5 of the Scheme Document.

Under the Scheme, all Company Shares will be transferred by the Entitled Shareholders to the Acquiror. The Scheme Shares will be acquired by the Acquiror (i) fully-paid, (ii) free from all Encumbrances, and (iii) together with all rights, benefits and entitlements as of the date of the Implementation Agreement and thereafter attaching thereto, including the right to receive and retain all dividends, rights and other distributions (if any) announced, declared, paid or made by the Company on or after the date of the Implementation Agreement, and in consideration, each Entitled Shareholder will be entitled to receive from the Acquiror an amount of S$2.68 in cash for each Scheme Share held by such Entitled Shareholder (which results in approximately US$18.96 for each ADS based on the prevailing exchange rate of S$1.4138 to US$1 from Bloomberg L.P. on the Latest Practicable Date), provided that if any dividend or distribution with respect to the Scheme Shares is declared or announced on or after the date of the Implementation Agreement, and such dividend or distribution is paid or made to holders of Company Shares of record as at any date that is on or prior to the Effective Date, the Scheme Consideration shall be reduced by the amount of such dividend or distribution.

Upon the Scheme becoming effective and binding, the Company will become a wholly-owned subsidiary of the Acquiror, and the Company shall be delisted from the Official List of the SGX-ST and Nasdaq. Accordingly, the Company shall terminate the registration of the ADSs and the Company Shares under the Exchange Act. The terms of the Scheme and the Implementation Agreement are more particularly described in Paragraphs 2 and 3 of the Company’s Letter to Shareholders in the Scheme Document.

101

APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


3.	OFFER AND OTHER ARRANGEMENTS


3.1	Preference Share Offer

In connection with and subject to the Scheme becoming effective, the Acquiror has or will be making an offer (“Preference Share Offer”) to the Preference Share Holders to purchase all the CRPS held by them for an amount in cash for each CRPS (being the Early Redemption Price determined by reference to the Effective Date) as described in Paragraph 4 of the Company’s Letter to Shareholders in the Scheme Document.

The details of the Preference Share Offer have been despatched to Preference Share Holders at or about the same time as the despatch of the Scheme Document.

Preference Share Holders should note that by accepting the Preference Share Offer, such acceptance by the accepting Preference Share Holders will be deemed (in respect of those CRPS tendered in acceptance of the Preference Share Offer) to be their consent in writing pursuant to Article 4A.21(3) of the Articles to the proposed amendment to Article 4A of the Articles in the manner set out in Paragraph 3.2(b) of this Letter below, which resolution, if consented to in writing by Preference Share Holders of at least three-fourths of the CRPS obtained within two (2) months of the Class Meeting (as defined below), shall be as valid and effectual as a special resolution carried at the Class Meeting.


3.2	Extraordinary General Meeting and Class Meeting

It is important for the Acquiror, that it becomes the sole shareholder of the Company.

Accordingly, Shareholders should note that pursuant to the terms of the Implementation Agreement, the Company has undertaken to convene an extraordinary general meeting (“EGM”) of the Shareholders to be held immediately upon the conclusion of the Court Meeting, for the purposes of passing, inter alia, the special resolutions to amend the Articles by inserting the terms described in Paragraphs 3.2(a) and 3.2(b) of this Letter:


	(a)	Where the Acquisition is to be effected by way of:


	(i)	a Scheme, subject to and upon the Scheme becoming effective and binding in accordance with its terms, if any new Company Shares are issued to any person other than any of GLOBALFOUNDRIES, the Acquiror or any subsidiary of any holding company for the time being of the Acquiror (a “New Member”) after:


	(aa)	the Voting Record Time and on or prior to the Effective Date; or

	(bb)	the Effective Date,

each such New Member shall be required to transfer to the Acquiror (or as the Acquiror may direct in writing to the Company), and the Acquiror shall be required to acquire from any such New Member, all and not some only of such new Company Shares on the relevant Transfer Date, free from all Encumbrances and with all rights attached to such new Company Shares on the relevant Transfer Date and thereafter attaching thereto, in consideration of a sum equal to the Transfer Consideration; or

102

APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


	(ii)	an Offer, subject to and upon the completion of the Compulsory Acquisition, if any new Company Shares are issued to any New Member after:


	(aa)	the Offer Cut-Off Date and on or prior to the Compulsory Acquisition Completion Date; or

	(bb)	the Compulsory Acquisition Completion Date,


	(b)	Subject to and upon:


	(i)	where the Acquisition is to be effected by way of a Scheme, the Scheme becoming effective and binding in accordance with its terms; or

	(ii)	where the Acquisition is to be effected by way of an Offer, the completion of the Compulsory Acquisition,

as the case may be, upon delivery of a Conversion Notice in respect of any CRPS to the Conversion Agent and a copy thereof to the Company in accordance with Article 4A.16 of the Articles, the Company shall have the right, but not the obligation in its sole discretion, and without the consent of any such Preference Share Holder, to satisfy its obligation to issue Company Shares upon the exercise of such Preference Share Holder’s conversion right by redeeming all and not part only of such CRPS for the Redemption Amount. If the Company elects to exercise its rights as described in this Paragraph 3.2(b), the Company shall notify the Preference Share Holders of its exercise of such right within 10 business days (as defined in Article 4A.1 of the Articles) of the date of receipt of such Conversion Notice, specifying the date of redemption, which notwithstanding Article 4A.16(10) of the Articles, shall be a date falling not less than five (5) business days (as defined in Article 4A.1 of the Articles) and not more than 20 business days (as defined in Article 4A.1 of the Articles) after the date of delivery of such notification to the Preference Share Holder, and the provisions of Article 4A.9 of the Articles shall apply to any such redemption.

The Company will also convene a meeting of Preference Share Holders (the “Class Meeting”) to be held immediately upon the conclusion of the EGM for the purpose of passing the resolution in Paragraph 3.2(b) of this Letter.

Upon the delisting of the Company from the Official List of the SGX-ST and Nasdaq upon the Scheme becoming effective and binding or the Offer closing with the appropriate level of acceptances so as to allow the Acquiror to exercise its right of Compulsory Acquisition, holders of Company Shares and holders of CRPS who convert their CRPS into Company Shares are likely to find it difficult to sell their Company Shares in a public market.

103

APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


3.3	Switch Option and Break Fee

As the Acquiror has committed substantial resources in entering into the Acquisition and to protect the certainty of the Acquisition, the Acquiror has in addition to securing the Irrevocable Undertakings, inter alia, entered into certain arrangements with the Company.

Pursuant to the Implementation Agreement, the Acquiror has, subject to prior consultation with the SIC, the right at its discretion to elect to proceed by way of an offer in lieu of proceeding with the Acquisition by way of the Scheme (the “Switch Option”), provided that this right may only be exercised if:


	(a)	any person (other than the Acquiror or any of its concert parties) publicly announces a Superior Offer (whether on a firm intention or a pre-conditional basis) for no less than 30% of the voting rights of the Company;

	(b)	the Acquiror validly exercises the Matching Right and receives or is deemed to have received the Matching Offer Determination stating that the Acquiror has matched the Superior Offer; and

	(c)	the Acquiror duly announces its firm intention to make the Offer.

If the Acquiror validly exercises the Switch Option, the Acquiror will make the Offer on the same or better terms as those set out in its proposal to the Company when exercising the Matching Right, and may provide for an acceptance condition set at only more than 50% of the Company Shares (including Company Shares held in the form of ADSs) and not conditional on higher level of acceptances.

Likewise, the Company will also have to pay the Acquiror a sum equal to S$25,375,176.64 representing 1% of the aggregate Scheme Consideration calculated on the basis of the fully diluted equity share capital of the Company (the “Fee”):


	(I)	if a Competing Offer or an intention to make a Competing Offer is announced by a third party (whether or not such Competing Offer is pre-conditional) and:


	(A)	whether pursuant to their fiduciary obligations or otherwise, the Independent Directors recommend or announce their intention to recommend the Competing Offer over the Scheme or do not unequivocally recommend that Shareholders vote in favour of the Scheme; or

	(B)	in the event that prior to the announcement of the Competing Offer or the intention to make a Competing Offer, the Independent Directors had recommended that Shareholders vote in favour of the Scheme, the Independent Directors withdraw such recommendation or announce their intention to withdraw such recommendation (provided that no Fee shall be payable under the circumstances described in this Paragraph 3.3(I) in respect of any withdrawal or announcement of intention to withdraw such recommendation unless, subsequent to such withdrawal or announcement of intention to withdraw, the Independent Directors recommend or announce their intention to recommend the Competing Offer over the Scheme or do not unequivocally recommend that Shareholders vote in favour of the Scheme),

and Shareholders’ approval for the Scheme is not obtained; or

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


	(II)	if the Company breaches any of the applicable Material Obligations:


	(A)	prior to the date of the Court Meeting and Shareholders’ approval for the Scheme is not obtained; or

	(B)	after Shareholders’ approval for the Scheme is obtained and the Scheme does not become effective by the Long-Stop Date due to any of the Scheme Conditions in Paragraphs (d) and (e) of Appendix 5 to the Scheme Document not being fulfilled other than as a result of the Company exercising its termination right as described under Paragraph 3.3.3(ii) of the Company’s Letter to Shareholders in the Scheme Document; or


	(III)	if the Company exercises its right to enter into negotiations, discussions or otherwise entertains an Unsolicited Offer, and the Shareholders’ approval for the Scheme is not obtained.


3.4	Options

No proposal will be made to the holders of the Options.


3.5	The GS Option

The Cancellation Amount is to be agreed by the Company and GS but, failing agreement, will be determined by GS as calculation agent.


4.	RATIONALE AND BENEFITS OF THE PROPOSED ACQUISITION AND FUTURE PLANS FOR THE COMPANY


4.1	Rationale and Benefits of the Proposed Acquisition

ATIC has made a significant investment in the outsourced semiconductor manufacturing, commonly referred to as “foundry”, industry with the creation of GLOBALFOUNDRIES. GLOBALFOUNDRIES offers its customers leading edge foundry services from its facility in Dresden, Germany and is currently developing a new facility in New York, the United States.

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS

The Acquisition would allow ATIC to build on the complementary platforms of the Company and GLOBALFOUNDRIES, utilising the Company’s customer relationships and capabilities in both 8-inch and 12-inch fabrication, and GLOBALFOUNDRIES’ advanced technology expertise, capacity profile and global footprint, and capitalise on the continued growth in the global semiconductor foundry industry.


4.2	Future Plans for the Group

Following the completion of the Acquisition, ATIC will work with the management teams of the Company and GLOBALFOUNDRIES to integrate the operations and management of the Company and GLOBALFOUNDRIES to achieve operational and financial synergies.


5.	GENERAL AND FINANCIAL INFORMATION RELATING TO THE ACQUIROR

General and financial information on the Acquiror is set out in Schedule A to this Letter.


6.	GENERAL AND FINANCIAL INFORMATION RELATING TO THE COMPANY


6.1	There is no restriction in the Memorandum and Articles of the Company on the right to transfer any Company Shares which has the effect of requiring the holders of the Company Shares, before transferring them, to offer them for purchase to members of the Company or to any other person.

6.2	As at the Latest Practicable Date, save for the information on the Company which is publicly available (including, without limitation, the audited consolidated financial statements of the Group for FY2006, FY2007 and FY2008 and the unaudited financial statements of the Group for the three (3) and six (6) months ended 30 June 2009 summaries of which are disclosed in Appendix 4 to the Scheme Document) and save as disclosed in the Scheme Document, there has not been, within the knowledge of the Acquiror, any material change in the financial position or prospects of the Company since 31 December 2008 (being the date of the last balance sheet of the Company laid before the Shareholders in a general meeting).

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


7.	SPECIAL ARRANGEMENTS


7.1	Employment Arrangements

In connection with the Scheme and the subsequent operational combination of the Company with GLOBALFOUNDRIES to form a single undertaking, Chia Song Hwee (currently the President, the Chief Executive Officer and a director of the Company), has entered into an employment agreement with GLOBALFOUNDRIES to be employed as the Chief Operating Officer and Executive Vice-President of GLOBALFOUNDRIES.


7.2	As at the Latest Practicable Date:


	(a)	Save as disclosed in the Scheme Document and Paragraphs 7.1 and 8 of this Letter, there is no agreement, arrangement or understanding between the Acquiror or any party acting in concert with it, and any of the present or recent Directors or the present or recent Shareholders, that has any connection with or is dependent on the Scheme.

	(b)	Save as disclosed in the Scheme Document, there is no agreement, arrangement or understanding whereby any of the Scheme Shares acquired by the Acquiror pursuant to the Scheme will or may be transferred to any other persons. However, the Acquiror reserves the right to direct or transfer any of the Scheme Shares acquired by the Acquiror pursuant to the Scheme to ATIC or GLOBALFOUNDRIES, or a wholly-owned subsidiary of ATIC or GLOBALFOUNDRIES.

	(c)	Save as disclosed in the Scheme Document, no payments or other benefits will be made or given to any Director or to any director of any corporation (which is by virtue of Section 6 of the Companies Act deemed to be related to the Company) as compensation for loss of office or otherwise in connection with the Scheme.

	(d)	Save as disclosed in the Scheme Document and Paragraphs 7.1 and 8 of this Letter, no agreement or arrangement exists between the Acquiror and any of the Directors or any other person in connection with or conditional upon the outcome of the Scheme or otherwise connected with the Scheme.


8.	IRREVOCABLE UNDERTAKINGS

Paragraph 6 of the Explanatory Statement in the Scheme Document sets out the details of the Shareholders who have given Irrevocable Undertakings (“Undertaking Shareholders”) to the Acquiror.

Shareholders should note that the aggregate shareholding represented by the Undertaking Shareholders is approximately 62.31% of the issued share capital of the Company as at the Latest Practicable Date.


9.	INTERESTS AND DEALINGS IN SECURITIES

Details relating to the interests and dealings of the Acquiror, its directors and any party acting in concert with the Acquiror for the purpose of the Scheme and dealings of the Undertaking Shareholders in the securities of the Company, are set out in Paragraph 7 of Schedule A to this Letter.

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


10.	IMPLEMENTATION OF THE SCHEME AND SETTLEMENT AND REGISTRATION PROCEDURES

Paragraphs 13 and 15 of the Explanatory Statement in the Scheme Document set out details of the process for the implementation of the Scheme and the settlement and registration procedures in relation thereto.


11.	AVAILABILITY OF FINANCIAL RESOURCES

Credit Suisse, in their capacity as financial adviser to the Acquiror and ATIC in connection with the Acquisition and the Scheme, confirms that sufficient financial resources are available to the Acquiror to satisfy in full the aggregate Scheme Consideration payable by it for all the Scheme Shares and to satisfy full acceptance of the Preference Share Offer.


12.	MARKET QUOTATIONS

Please refer to Paragraph 6 of Schedule A to this Letter for information on (a) the highest, lowest (on the daily closing prices for the monthly market data) and last closing prices and transacted volume of the Company Shares on the SGX-ST on a monthly basis from March 2009 to September 2009; and (b) the closing prices of the Company Shares on the SGX-ST (i) on 4 September 2009, being the last Business Day preceding the date of the Announcement; (ii) on the Latest Practicable Date; and (iii) at the end of each of the six (6) calendar months preceding the date of the Announcement.


13.	RESPONSIBILITY STATEMENT

The directors of the Acquiror and ATIC (including any director who may have delegated detailed supervision of the preparation of this Letter) have taken all reasonable care to ensure that the facts stated and the opinions expressed in this Letter (other than those relating to the Company or the Group) are fair and accurate and, that where appropriate, no material facts have been omitted from this Letter, the omission of which would make any statement in this Letter misleading, and they jointly and severally accept responsibility accordingly. Where any information has been supplied by the Company or has been extracted from published or otherwise publicly available sources, the sole responsibility of the directors of the Acquiror and ATIC for such information has been to ensure, through reasonable enquiries, that such information has been correctly and accurately extracted from such sources or, as the case may be, reflected or reproduced in this Letter. The directors of the Acquiror and ATIC do not accept any responsibility for any information relating to or opinions expressed by the Company.

Yours faithfully

For and on behalf of

ATIC INTERNATIONAL INVESTMENT COMPANY LLC

SAMAK AZAR

DIRECTOR

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS

The Acquisition relates to the shares of a Singapore company and is proposed to be made by means of a scheme of arrangement under Singapore company law. The Scheme is not subject to the tender offer or proxy rules under the Exchange Act. Accordingly, the Scheme is subject to the disclosure requirements, rules and practices applicable in schemes of arrangements in Singapore, which differ from the requirements of United States tender offer and proxy rules. If the Acquiror exercises its right in the future to make an Offer, the Offer will be made in compliance with the applicable United States laws and regulations.

This document contains forward-looking statements, which are made pursuant to the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements relating to the future plans of the Company following the Acquisition and the expected benefits from the Acquisition. These forward-looking statements are based on the current expectations of the Acquiror and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. In particular, we cannot assure you that the Acquisition will be approved by the Shareholders or that the Scheme Conditions will be satisfied or that the Acquisition will occur. Neither the Company nor the Acquiror undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS

Schedule A
(Letter from the Acquiror to Shareholders)

GENERAL AND FINANCIAL INFORMATION ON ATIC AND THE ACQUIROR


1.	INCORPORATION

ATIC was established in Abu Dhabi on 28 September 2008. A technology investment company wholly-owned by the Government of Abu Dhabi, ATIC is focused on making significant investments in the advanced technology sector, both in Abu Dhabi and internationally. ATIC’s mandate is to generate returns that deliver long-term economic and social benefits to Abu Dhabi.

The Acquiror is a special purpose vehicle incorporated in Abu Dhabi on 2 September 2009 for the purpose of the Acquisition. The Acquiror is a wholly-owned subsidiary of ATIC.


2.	DIRECTORS

The names, addresses and designations of directors of the Acquiror as at the Latest Practicable Date are set out below:


Name	Address	Designation
Ibrahim Ajami	c/o PO Box 45005 Abu Dhabi United Arab Emirates	Director

Samak Azar	c/o PO Box 45005 Abu Dhabi United Arab Emirates	Director


3.	PRINCIPAL ACTIVITIES

The Acquiror is a special purpose vehicle incorporated for the purpose of the Acquisition.


4.	SHARE CAPITAL

As at the Latest Practicable Date, the Acquiror has a paid-up capital of 150,000 United Arab Emirates Dirham divided into 150 shares of 1,000 United Arab Emirates Dirham each.


5.	FINANCIAL INFORMATION ON ATIC AND THE ACQUIROR

As ATIC was established on 28 September 2008 and its first financial year end is on 31 December 2009 and the Acquiror was newly incorporated on 2 September 2009 for the purpose of the Acquisition, no audited or unaudited financial statements of ATIC and the Acquiror have been prepared to date for inclusion in this Letter.

Save as a result of the financing of the Acquisition and the Scheme, there have been, within the knowledge of the directors of ATIC and the Acquiror, no known material changes in the financial position of ATIC and the Acquiror since their incorporation.

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


6.	MARKET QUOTATIONS


	(a)	Transacted Prices

The highest, lowest (on the daily closing prices for the monthly market data) and last closing prices and transacted volume of the Company Shares on the SGX-ST on a monthly basis from March 2009 to September 2009, as reported in Bloomberg L.P., are set out below:


							Transacted
							Volume of
	Highest		Lowest				the
	Closing		Closing		Last		Company
	Price		Price		Closing Price		Shares
	(S$)		(S$)		(S$)		(’000)

Monthly Trades 2009

March		1.66		0.70		1.35		68,837
April		1.75		1.25		1.65		222,272
May		2.20		1.65		2.20		168,690
June		2.36		2.02		2.05		115,240
July		2.27		1.81		2.24		49,592
August		2.41		2.24		2.38		62,132
September		2.66		2.48		2.60		119,072


	(b)	Highest and Lowest Prices

During the period commencing six (6) months prior to 7 September 2009 (being the date of the Announcement) and ending on the Latest Practicable Date, the highest closing price was S$2.66 per Company Share, transacted on 4 September 2009, and the lowest closing price was S$0.70 per Company Share, transacted on 12 March 2009.


	(c)	Closing Prices

The closing price on:


	(i)	4 September 2009, the last Business Day prior to the date of the Announcement, was S$2.66 per Company Share; and

	(ii)	the Latest Practicable Date was S$2.62 per Company Share.


7.	DISCLOSURE OF INTERESTS IN SECURITIES AND DEALINGS


	(a)	As at the Latest Practicable Date, save for the Irrevocable Undertakings from the Undertaking Shareholders, none of the Acquiror, its directors, or any party acting in concert with the Acquiror for the purpose of the Scheme, has received any irrevocable undertaking to vote in favour of the Scheme at the Court Meeting prior to the posting of this Letter. Details of the Company Shares held by the Undertaking Shareholders are set out in Paragraph 6 of the Explanatory Statement in the Scheme Document.

	(b)	Save as disclosed in this Paragraph 7 of this Schedule A as at the Latest Practicable Date, or as at 29 September 2009 (being two (2) Business Days prior to the Latest Practicable

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APPENDIX 3 - LETTER FROM THE ACQUIROR TO SHAREHOLDERS


		Date) in relation to Credit Suisse and such entities and branches within the Credit Suisse Group AG presumed to be acting in concert with the Acquiror (the “CS Entities”), none of the Acquiror, its directors, any party acting in concert with the Acquiror for the purpose of the Scheme, owns, controls or has agreed to acquire Company Shares or securities which carry voting rights in the Company, or instruments convertible into, rights to subscribe for or options in respect of such Company Shares or such securities.


	(c)	Save as set out below, as at the Latest Practicable Date, or as at 29 September 2009 (being two (2) Business Days prior to the Latest Practicable Date) in relation to the CS Entities, none of the Acquiror, its directors, any party acting in concert with the Acquiror for the purpose of the Scheme or the Undertaking Shareholders, has dealt for value in any Company Shares or securities which carry voting rights in the Company, or instruments convertible into, rights to subscribe for or options in respect of such Company Shares or such securities, during the period commencing three (3) months prior to the Announcement Date and ending on the Latest Practicable Date or 29 September 2009 (as the case may be):


			Price (US$)	Number of	Number of
			per	Company	Company
	Date of	Nature of	Company	Shares*	Shares*
Name	Transaction	Transaction	Share*	Acquired	Sold

Credit Suisse Securities (USA) LLC	20 July 2009	Buy	14.60	300	—
	21 July 2009	Sell	14.67	—	100
	23 July 2009	Sell	15.86	—	100
	23 July 2009	Sell	16.24	—	100
	5 August 2009	Buy	15.41	500	—
	6 August 2009	Sell	15.50	—	100
	14 August 2009	Sell	15.88	—	300
	14 August 2009	Sell	15.93	—	100


	*	American Depositary Receipt(s)


	(d)	Save for the Irrevocable Undertakings from the Undertaking Shareholders, as at the Latest Practicable Date, or as at 29 September 2009 (being two (2) Business Days prior to the Latest Practicable Date) in relation to the CS Entities, none of the Acquiror, its directors, or any party acting in concert with the Acquiror for the purpose of the Scheme, has entered into any arrangement of the kind referred to in Note 7 on Rule 12 of the Code, including indemnity or option arrangements, or any agreement or understanding, formal or informal, of whatever nature, relating to (i) the Company Shares or securities carrying voting rights in the Company; (ii) securities carrying conversion or subscription rights into any of (i); or (iii) options in respect of (i) or (ii) which may be an inducement to deal or refrain from dealing in the aforesaid securities.

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


1.	DIRECTORS

The names, addresses and descriptions of the Directors as at the Latest Practicable Date are as follows:


Name	Address	Description

James A. Norling	7239 N Desert Fairways Drive Paradise Valley Arizona 85253 United States of America	Director and Chairman

Chia Song Hwee	35 Greenbank Park Green Bank Park Singapore 589396	Director, President and CEO

Philip Tan Yuen Fah	33 Namly Drive Shamrock Park Singapore 267447	Director and Chairman of the Audit Committee

Peter Seah Lim Huat	45 Binjai Park Binjai Park Singapore 589845	Director and Chairman of the ERCC

Charles E. Thompson	3750 E. Minton Place Mesa Arizona 85215 United States of America	Director

Tay Siew Choon	6 Third Avenue Singapore 266579	Director

Pasquale Pistorio	Via Marconi 19 23873 Missaglia Lecco Italy	Director

Steven H. Hamblin	9431 Windrush Drive Spring Texas 77379 United States of America	Director

Maurizio Ghirga	Via Matteotti 102 21020 Casciago (Va) Italy	Director

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


2.	PRINCIPAL ACTIVITIES

The Company was incorporated in Singapore on 16 November 1987. The Company Shares were listed on the Main Board of the SGX-ST on 1 November 1999 and the ADSs were listed on Nasdaq on 29 October 1999. The Company is one of the world’s leading dedicated semiconductor foundries. The Group provides comprehensive wafer fabrication services and technologies to semiconductor suppliers and systems companies and focus on providing foundry services to customers that serve high-growth, technologically advanced applications for the communications, consumer and computer sectors.

The Group currently owns, or has an interest in, six fabrication facilities — Fabs 2, 3, 3E, 5, 6 and 7, all of which are located in Singapore. In addition, the Group has service operations in nine locations in seven countries throughout North America, Europe and Asia.


3.	DISCLOSURE OF SHAREHOLDINGS AND DEALINGS


3.1	Disclosures of Interests in Securities.


	3.1.1	Interests in the Securities of the Company:


	(i)	As at the Latest Practicable Date, save as disclosed below, none of the Company Directors owns, controls or has agreed to acquire any Company Shares or Company Convertible Securities:


	(a)	Interests in Company Shares:


		Direct Interest		Deemed Interest
	Name of	No. of		No. of
	Company	Company	Percentage	Company	Percentage
No.	Director	Shares	(%)	Shares	(%)
(1)	James A. Norling	39,799	n.m.	—	—

(2)	Chia Song Hwee	188,000	0.02	—	—

(3)	Philip Tan Yuen Fah	5,351	n.m.	—	—

(4)	Peter Seah Lim Huat	5,268	n.m.	—	—

(5)	Charles E. Thompson	41,890	n.m.	—	—

(6)	Tay Siew Choon	4,154	n.m.	—	—

(7)	Pasquale Pistorio	652,684	0.07	—	—

(8)	Steven H. Hamblin	13,422	n.m.	—	—

(9)	Maurizio Ghirga	3,389	n.m.	—	—

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


	(b)	Interests in Options:

No. of

Company

Name of

Shares

Exercise Price

Company

comprised in

per Company

No.

Director

Options

Share (S$)

Exercise Period

(1)

James A. Norling

220,473

S$7.10 to S$25.80

1 May 2002 to
31 August 2012

(2)

Chia Song Hwee

1,362,878

S$4.78 to S$94.50

29 October 1999 to
31 August 2017

(3)

Philip Tan Yuen Fah

34,302

S$7.10 to S$8.10

26 August 2006 to
31 August 2012

(4)

Peter Seah Lim Huat

34,302

S$7.10 to S$8.10

26 August 2006 to
31 August 2012

(5)

Charles E. Thompson

24,878

S$7.10 to S$8.10

26 August 2006 to
31 August 2012

(6)

Tay Siew Choon

24,878

S$7.10 to S$8.10

26 August 2006 to
31 August 2012

(7)

Pasquale Pistorio

24,878

S$7.10 to S$8.10

26 August 2006 to
31 August 2012

(8)

Steven H. Hamblin

15,831

S$7.10 to S$8.10

25 August 2007 to
31 August 2012

(9)

Maurizio Ghirga

5,277

S$7.10

31 August 2008 to
31 August 2012

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


	(c)	Interests in RSUs:


	Name of	No. of
	Company	Company Shares
No.	Director	comprised in RSUs	Vesting Period
(1)	James A. Norling	44,717	30 May 2010 to 7 August 2012

(2)	Chia Song Hwee	229,522	30 May 2010 to 29 May 2012

(3)	Philip Tan Yuen Fah	24,967	30 May 2010 to 7 August 2012

(4)	Peter Seah Lim Huat	24,967	30 May 2010 to 7 August 2012

(5)	Charles E. Thompson	20,585	30 May 2010 to 7 August 2012

(6)	Tay Siew Choon	21,935	30 May 2010 to 7 August 2012

(7)	Pasquale Pistorio	17,258	30 May 2010 to 7 August 2012

(8)	Steven H. Hamblin	23,206	30 May 2010 to 7 August 2012

(9)	Maurizio Ghirga	23,206	30 May 2010 to 7 August 2012


	(d)	Interests in PSUs:


	Name of	No. of
	Company	Company Shares
No.	Director	comprised in PSUs	Vesting Period
(1)	James A. Norling	—	—

(2)	Chia Song Hwee	116,062	31 August 2010 to 29 May 2012

(3)	Philip Tan Yuen Fah	—	—

(4)	Peter Seah Lim Huat	—	—

(5)	Charles E. Thompson	—	—

(6)	Tay Siew Choon	—	—

(7)	Pasquale Pistorio	—	—

(8)	Steven H. Hamblin	—	—

(9)	Maurizio Ghirga	—	—

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


	(ii)	As at the Latest Practicable Date, save as disclosed below and based on the Register of Substantial Shareholders maintained by the Company, none of the Substantial Shareholders has any interest, direct or indirect, in any Company Shares or Company Convertible Securities:



Name of Substantial Shareholder	Direct Interest		Deemed Interest


	No. of Company Shares	Percentage (%)	No. of Company Shares	Percentage (%)

Temasek Holdings (Private) Limited	—	—	586,752,688	62.28

Singapore Technologies Semiconductors Pte Ltd	586,752,688	62.28	—	—

Dodge & Cox International Stock Fund	74,293,836	7.89	—	—


	(iii)	As at the Latest Practicable Date, none of (a) the IFA, (b) entities or branches which are members of the Deutsche Bank AG group of companies and which are incorporated, established or registered in Singapore or Hong Kong (the “DB Related Entities”) and (c) funds whose investments are managed by the IFA or the DB Related Entities on a discretionary basis, owns, controls or has agreed to acquire any Company Shares or Company Convertible Securities.


	3.1.2	Interests in the Securities of the Acquiror:


	(i)	As at the Latest Practicable Date, none of the Company or its subsidiaries owns, controls or has agreed to acquire any Acquiror Shares or Acquiror Convertible Securities.

	(ii)	As at the Latest Practicable Date, none of the Company Directors owns, controls or has agreed to acquire any Acquiror Shares or Acquiror Convertible Securities.


	3.1.3	Interests in the Securities of ATIC:


	(i)	As at the Latest Practicable Date, none of the Company or its subsidiaries owns, controls or has agreed to acquire any ATIC Shares or ATIC Convertible Securities.

	(ii)	As at the Latest Practicable Date, none of the Company Directors owns, controls or has agreed to acquire any ATIC Shares or ATIC Convertible Securities.


3.2	Disclosure of Dealings in Securities.


	3.2.1	Dealings in the Securities of the Company:


	(i)	Pursuant to the Company’s 27-for-10 rights offering completed on 15 April 2009, the following Company Directors subscribed for, and were allocated, excess rights to subscribe for the following number of Company Shares or ADSs, as the case

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


		may be, at the following prices: (a) Steven Hugh Hamblin, 5,000 ADSs at US$0.45 per ADS; (b) Charles E Thompson, 662 Company Shares at S$0.07 per Company Share, (c) Tay Siew Choon, 662 Company Shares at S$0.07 per Company Share, and (d) Philip Tan Yuen Fah, 829 Company Shares at S$0.07 per Company Share. Further, Pasquale Pistorio, who took up rights to subscribe for 4,000,000 Company Shares (out of his entitlement to subscribe for 6,750,000 Company Shares) sold rights to subscribe for 2,750,000 Company Shares. Save as disclosed above, none of the Company Directors has dealt for value in the Company Shares or Company Convertible Securities during the period commencing six months immediately preceding the Announcement Date and ending on the Latest Practicable Date.


	(ii)	None of (a) the IFA, (b) the DB Related Entities and (c) funds whose investments are managed by the IFA or the DB Related Entities on a discretionary basis, has dealt for value in any Company Shares or Company Convertible Securities during the six month period immediately preceding the Announcement Date and ending on the Latest Practicable Date.


	3.2.2	Dealings in the Securities of the Acquiror:


	(i)	None of the Company or any of its subsidiaries has dealt for value in the Acquiror Shares or Acquiror Convertible Securities during the period commencing six months immediately preceding the Announcement Date and ending on the Latest Practicable Date.

	(ii)	None of the Company Directors has dealt for value in the Acquiror Shares or Acquiror Convertible Securities during the period commencing six months immediately preceding the Announcement Date and ending on the Latest Practicable Date.


	3.2.3	Dealings in the Securities of ATIC:


	(i)	None of the Company or any of its subsidiaries has dealt for value in the ATIC Shares or ATIC Convertible Securities during the period commencing six months immediately preceding the Announcement Date and ending on the Latest Practicable Date.

	(ii)	None of the Company Directors has dealt for value in the ATIC Shares or ATIC Convertible Securities during the period commencing six months immediately preceding the Announcement Date and ending on the Latest Practicable Date.

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APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY

4. FINANCIAL INFORMATION ON THE GROUP


4.1	Summary of Annual Financial Performance.


	4.1.1	Summary of Annual Financial Performance: The financial data tabulated below is extracted from, and should be read with, the audited consolidated financial statements of the Group for FY2006, FY2007 and FY2008 and the related notes thereto (which are incorporated by reference and copies of which are also available for inspection as mentioned in Paragraph 15 of this Appendix):

CONSOLIDATED STATEMENTS OF OPERATIONS — in US Dollars
For the Years Ended December 31
In thousands (except per share data)


	2006			2007			2008

Net revenue	$	1,414,525		$	1,355,486		$	1,661,120
Cost of revenue		(1,070,512	)		(1,095,830	)		(1,447,309	)

Gross profit		344,013			259,656			213,811

Other revenue		21,030			22,930			13,367

OPERATING EXPENSES
Research and development		152,756			159,764			177,866
Sales and marketing		55,007			58,013			69,469
General and administrative		42,558			39,648			43,053
Other operating expenses, net		13,766			13,030			10,138

Total operating expenses, net		264,087			270,455			300,526

Equity in income of associated companies, net		36,040			33,836			25,997
Other income (loss), net		(2,689	)		(2,418	)		2,905
Interest income		44,591			27,031			15,379
Interest expense and amortization of debt discount		(87,950	)		(60,325	)		(67,971	)

Income (loss) before income tax		90,948			10,255			(97,038	)
Income tax expense (benefit)		23,924			(91,433	)		(4,459	)

Net income (loss)		67,024			101,688			(92,579	)

Less: Accretion to redemption value of convertible redeemable preference shares		9,476			9,663			10,042

Net income (loss) available to ordinary shareholders	$	57,548		$	92,025		$	(102,621	)

Basic net earnings (loss) per ordinary share	$	0.02		$	0.04		$	(0.04	)

Diluted net earnings (loss) per ordinary share	$	0.02		$	0.04		$	(0.04	)

Basic net earnings (loss) per ADS	$	0.23		$	0.36		$	(0.40	)

Diluted net earnings (loss) per ADS	$	0.23		$	0.35		$	(0.40	)

119

APPENDIX 4 - GENERAL INFORMATION RELATING TO THE COMPANY


	2006			2007			2008

Number of ordinary shares used in computing:
Basic net earnings (loss) per ordinary share		2,528,056			2,538,357			2,541,435
Effect of dilutive securities		6,009			330,260			—

Diluted net earnings (loss) per ordinary share		2,534,065			2,868,617			2,541,435

Number of ADS used in computing:
Basic net earnings (loss) per ADS		252,806			253,836			254,144
Effect of dilutive securities		601			33,026			—

Diluted net earnings (loss) per ADS		253,407			286,862			254,144

Net income (loss)	$	67,024		$	101,688		$	(92,579	)
Net unrealized gains (losses) on change in cash flow hedging fair values		(1,664	)		1,824			(705	)
Share of cash flow hedging gains of associated companies		9			1			—
Reclassification of cash flow hedging (gains) losses into earnings		435			(1,917	)		554
Foreign currency translation		568			(33	)		(658	)
Unrealized losses on available-for-sale securities		(11	)		(149	)		(1,872	)
Reclassification of realized losses on available-for-sale securities into earnings		2,350			835			1,287

Other comprehensive income (loss), net		1,687			561			(1,394	)

Comprehensive income (loss), net	$	68,711		$	102,249		$	(93,973	)


	4.1.2	Summary of Interim Financial Performance: The financial data tabulated below is extracted from, and should be read together with, the unaudited condensed consolidated financial statements of the Group for the financial period ended 30 June 2009 and the related notes thereto (which is incorporated by reference and a copy of which is also available for inspection as mentioned in Paragraph 15 of this Appendix):


	In thousands (except per share data)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2009		2008		2009

Net revenue	$	457,562	$	349,012	$	845,792	$	59

CHARTERED SEMICONDUCTOR MANUFACTURING LTD 6-K