Thursday, 25 February 2010

Operations of key Sino-Environment unit have ceased

Sino-Environment said that all business operations at its main subsidiary in Fuzhou have ceased, leaving its plant and equipment sitting idle.

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Guanyu 道 said...

Operations of key Sino-Environment unit have ceased

By LYNETTE KHOO
24 February 2010

Sino-Environment said that all business operations at its main subsidiary in Fuzhou have ceased, leaving its plant and equipment sitting idle.

The group may not be able to record any revenue until its operations are resumed, its board of directors said in a regulatory filing yesterday.

Upon any restructuring, it is estimated to take eight to 12 months to secure new contracts and restore business contracts. To reduce burn rate, the board said the company will undertake a major cost-cutting exercise, which could include relocating its current office premises from Suntec Tower to a less costly premise.

These updates were posted by the group following a press conference held by retail investor watchdog Singapore Investors Association (Singapore chief David Gerald yesterday afternoon.

Mr. Gerald had urged the new directors who joined Sino-Environment in January to break the silence and inform investors on what immediate actions they have taken to recover the group assets, resolve issues raised by special auditors and rectify a $149 million convertible bond default.

‘We need answers from the board and the new CEO,’ Mr. Gerald said. He also questioned why there has been no transfer of money despite claims by former group executive directors that there was $14 million in a Xiamen bank which they could transfer to a Singapore account.

Sino-Environment informed yesterday that its new directors met up with bondholders in its Fuzhou plant last month and are currently in discussions on a standstill agreement. The board is also reviewing the group’s corporate governance and internal controls procedures ‘with the objective of tightening identified and perceived gaps’.

The board is also planning to task its auditors, PricewaterhouseCoopers (PwC), to continue with its review on cash transactions and bank balances during the financial year ended Dec 31, 2009.

PwC’s probe into Sino-Environment last year discovered that some $85 million of cash transactions were allegedly made without board approval and knowledge. But the Fuzhou Public Security Bureau in China said in December it found no evidence of chairman Sun Jiangrong embezzling company funds and decided not to put the case on file.

Mr. Gerald urged Mr. Sun to come to Singapore and explain to shareholders on the missing cash, unauthorised investments, and his conduct - now that he is no longer under probe by the Chinese authorities.

‘He’s got a lot to explain,’ Mr. Gerald said, referring to Mr. Sun’s debt woes that snowballed into a convertible bond default for the group, which soon was followed by missing cash in the company.

Mr. Gerald yesterday urged the board to remove Mr. Sun as the legal rep and set up an investigating committee to work with the provincial government.