Thursday, 25 February 2010

Sino-Environment issues update following criticism

Embattled Sino-Environment Technology Group has issued a long-awaited update to anxious shareholders, just hours after it received a tongue-lashing from the head of a retail investors’ body.

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Guanyu 道 said...

Sino-Environment issues update following criticism

Dawn Zeng
24 February 2010

Embattled Sino-Environment Technology Group has issued a long-awaited update to anxious shareholders, just hours after it received a tongue-lashing from the head of a retail investors’ body.

Earlier this month, Sino-Environment appointed a new chief executive, Mr. Sam Chong Keen, in a bid to turn the crippled waste recycler’s business around.

But Securities Investors Association (Singapore) president and chief executive David Gerald was upset at the company’s failure to give shareholders an update - especially on missing assets in China estimated at $120 million.

At a press conference yesterday, Mr. Gerald said he had met the company’s independent directors last December and learnt that they had brought in new directors and were seeking a new boss.

He had drafted a statement to the press at the time, but had approached the company first as a courtesy, to allow it to answer his questions. Since then, however, he has not heard from the company.

‘Not a single phone call or any update on the progress. Why the silence? Enough is enough,’ he said.

Just hours after the 3pm press conference, Sino-Environment issued a statement to the Singapore Exchange at 6.25pm, in what appeared to be a response to Mr. Gerald’s forthright statements.

The company said business operations at its main subsidiary in Fuzhou have ceased, and the group may not be able to record any business revenue until operations resume, which will take eight to 12 months after successful restructuring.

The statement, signed by Mr. Sam, who assumed the top job on Feb 10, said: ‘The CEO’s immediate priority is to review and reduce the group’s burn rate. Accordingly, a major cost-cutting exercise will be undertaken as soon as practicable.’

Mr. Sam first joined the board as a non-executive director last month. In the last four years, he spent two years each restructuring two companies: Xpress Holdings and Jade Technologies. He is still a non-executive director at both firms.

In line with his past appointments at Xpress and Jade, he will be paid in equity, drawing a nominal cash salary of $1 for each year of service.

Also, should Sino-Environment fail to obtain the requisite approvals for the new appointment from the relevant parties within three months of the date of Mr. Sam’s appointment, he will get $100,000 for each month of service, up to a maximum of $300,000, unless revised by the board.

Mr. Gerald was not impressed, stating that Mr. Sam was essentially ‘guaranteed a $300,000 salary’. ‘For a company which has lost money and is in dire straits, do they think we will be impressed with $1? I would rather that you be paid for performance,’ he said.

He also said former chairman Sun Jiangrong, who remains as the company’s legal representative, has the ultimate power and remains a key roadblock that the new board and CEO have to tackle.

In his statement to the press, Mr. Gerald also questioned the location of ‘the $14 million (supposedly in a China bank account) which the company said would be transferred to Singapore’.

His advice to retail investors: ‘If ever a China company is listed in Singapore which has got business in China, management in China and money in China - please think 100 times before you put your money into the company. I hope to be corrected by Mr. Sam Chong Keen.’