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Saturday 7 March 2009
Sino-Env appoints financial adviser
Faced with the threat of a change in shareholder control, Sino-Environment Technology is seeking the advice of nTan Corporate Advisory Pte Ltd on all implications and the measures needed to keep its business going.
Faced with the threat of a change in shareholder control, Sino-Environment Technology is seeking the advice of nTan Corporate Advisory Pte Ltd on all implications and the measures needed to keep its business going.
The group also requested a trading suspension of its shares yesterday pending its discussions with convertible bond holders.
These moves followed earlier disclosures that its chairman and chief executive, Sun Jiangrong, is at risk of losing his controlling stakeholding of 56.29 per cent. He had defaulted on certain financial obligations to hedge funds and his pledged shares may be force-sold. Offers to bid for the shares had been solicited by the hedge funds.
The group was informed that Mr. Sun had pledged all the shares he owns in the group and some personal assets of about 10 billion yuan (S$2.2 billion) for original notes worth $120 million issued by hedge funds managed by Stark Investments (Hong Kong) Ltd, Singapore Branch Asia.
About $55 million of the notes was prepaid before their maturity while the balance of $65 million became due on Feb 16.
When contacted, the group’s chief financial officer David Tan declined comment but clarified that the assets, other than the shares, pledged by Mr. Sun are the latter’s personal holdings.
Some dealers felt that the trading suspension was meant to ‘buy time’ to stave off a force-sale of the shares till a solution is found.
But the group said in a filing yesterday that the suspension is expected to be short term and will be lifted as soon as it has obtained the views of bond holders.
A change in control of the group may trigger early conversion or redemption of the outstanding $149 million convertible bonds, and also crystallise defaults on a corresponding swap arrangement.
‘In view of this, the company may not be able to make payment for such unscheduled full redemption by the bondholders, if called upon to do so,’ the group said yesterday.
Under the convertible bond agreement, bondholders can require the company to redeem all their bonds at 100 per cent of the principal amount of the bonds plus a redemption premium under three scenarios: a change of control of the group; delisting of the shares; or on July 8, 2010.
The convertible bond structure included an equity swap between Sino-Environment and the lead manager of the bonds Morgan Stanley Asia (Singapore). This exposes the group to the gains or losses in value of some 36.856 million notional shares compared to its initial purchase price of $1.8276.
The counter was last traded at an all-time low of $0.295 on Monday. This would translate to an additional realised loss of about $56.5 million from the equity swap.
Nicky Tan, CEO of nTan Corporate Advisory, told BT that his team was seeking access to the group’s financial and operational data as well as contacting the bond holders.
Sino-Environment also warned yesterday that a change in control may adversely affect business continuity. There is no certainty that the group may be able to retain the services of Mr. Sun if he loses his controlling stake, while its business contacts and existing contracts with customers may also be adversely affected.
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Sino-Env appoints financial adviser
By LYNETTE KHOO
7 March 2009
Faced with the threat of a change in shareholder control, Sino-Environment Technology is seeking the advice of nTan Corporate Advisory Pte Ltd on all implications and the measures needed to keep its business going.
The group also requested a trading suspension of its shares yesterday pending its discussions with convertible bond holders.
These moves followed earlier disclosures that its chairman and chief executive, Sun Jiangrong, is at risk of losing his controlling stakeholding of 56.29 per cent. He had defaulted on certain financial obligations to hedge funds and his pledged shares may be force-sold. Offers to bid for the shares had been solicited by the hedge funds.
The group was informed that Mr. Sun had pledged all the shares he owns in the group and some personal assets of about 10 billion yuan (S$2.2 billion) for original notes worth $120 million issued by hedge funds managed by Stark Investments (Hong Kong) Ltd, Singapore Branch Asia.
About $55 million of the notes was prepaid before their maturity while the balance of $65 million became due on Feb 16.
When contacted, the group’s chief financial officer David Tan declined comment but clarified that the assets, other than the shares, pledged by Mr. Sun are the latter’s personal holdings.
Some dealers felt that the trading suspension was meant to ‘buy time’ to stave off a force-sale of the shares till a solution is found.
But the group said in a filing yesterday that the suspension is expected to be short term and will be lifted as soon as it has obtained the views of bond holders.
A change in control of the group may trigger early conversion or redemption of the outstanding $149 million convertible bonds, and also crystallise defaults on a corresponding swap arrangement.
‘In view of this, the company may not be able to make payment for such unscheduled full redemption by the bondholders, if called upon to do so,’ the group said yesterday.
Under the convertible bond agreement, bondholders can require the company to redeem all their bonds at 100 per cent of the principal amount of the bonds plus a redemption premium under three scenarios: a change of control of the group; delisting of the shares; or on July 8, 2010.
The convertible bond structure included an equity swap between Sino-Environment and the lead manager of the bonds Morgan Stanley Asia (Singapore). This exposes the group to the gains or losses in value of some 36.856 million notional shares compared to its initial purchase price of $1.8276.
The counter was last traded at an all-time low of $0.295 on Monday. This would translate to an additional realised loss of about $56.5 million from the equity swap.
Nicky Tan, CEO of nTan Corporate Advisory, told BT that his team was seeking access to the group’s financial and operational data as well as contacting the bond holders.
Sino-Environment also warned yesterday that a change in control may adversely affect business continuity. There is no certainty that the group may be able to retain the services of Mr. Sun if he loses his controlling stake, while its business contacts and existing contracts with customers may also be adversely affected.
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