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Sino-Env CEO on why nTan services were terminatedBy LYNETTE KHOO02 March 2010As part of its cost-cutting measures, troubled S-chip company Sino-Environment has terminated the services of its independent financial adviser nTan Corporate Advisory with effect from Feb 18.The task of negotiating and liaising with the bondholders will now rest on the group’s newly appointed chief executive officer, Sam Chong Keen - who also clarified with BT yesterday on issues raised on his remuneration by the retail investor watchdog.Sino-Environment had hired Nicky Tan’s corporate advisory firm nearly one year ago to resolve a default on $149 million convertible bonds triggered by its founder’s loss of controlling stake.But the former executive directors took issue with the fact that the distressed company had to pay nTan a retainer fee of $3 million.‘Now that we have a new CEO, the board feels that it is the job of the CEO to handle the bondholders and it’s also a way to cut cost,’ Mr. Sam said.Other measures to reduce burn rate - including moving the office premise to a less costly location - is ‘in the process of being implemented’, he added.Mr. Sam joined the board as a non-executive director on Jan 5 before becoming CEO on Feb 10.In line with his past appointments at Xpress Holdings and Jade Technologies, he will be paid in shares and a cash salary of $1 for each year of service.But should Sino-Environment fail to obtain requisite approvals for the appointment from the relevant parties within three months from Feb 10, Mr. Sam will get $100,000 for each month of service, up to a maximum of $300,000, unless revised by the board.This payment scheme, however, drew flak from Securities Investors Association (Singapore) chief David Gerald, who felt that he was ‘essentially guaranteed a $300,000 salary’.Mr. Sam told BT ‘there is some misunderstanding about the structure’.‘The $300,000 is not really a guarantee as such... There is actually no cash impact unless the shareholders decide to vote against my appointment. Then obviously, you have to be fair to pay me for the work done for the three months. But if the shareholders vote to retain me, I don’t get paid a cent. I will revert to the $1 and shares scheme. If you read carefully, that’s the interpretation.’‘And I can really end up with $1 if the company doesn’t get restructured and we don’t get settlement with the bondholders,’ he added. ‘Don’t forget that the company has a debt of $149 million to the bondholders. If the restructuring is not successful or if the share trading suspension is not lifted, 100 million shares times zero is still zero.’In the case of Xpress and Jade, he was to be paid a smaller sum of $30,000 for each month of service if requisite approvals for his appointment were not obtained.But Mr. Sam explained that the risk of being voted out in the previous cases was lower given the support he had from majority shareholders, whereas at Sino-Environment, there are currently no major shareholders.
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