E3, Sinomem unit may be facing corporate governance issues
By CHEW XIANG 17 October 2008
(SINGAPORE) Two more companies with principal operations in China may have stumbled over corporate governance issues.
Yesterday, Catalist-listed E3 Holdings, which is developing a three sq km plot of land in Jilin province in China into oil and chemical production facilities, said that it had received seven poison pen letters in September.
The allegations in the letters are understood to pertain to issues surrounding some of the company’s recent projects, including a now withdrawn attempt to buy a stake in a Chinese oil refinery, as well as general concerns with the company’s recent strategy.
Last night, chief executive officer Jonathan Ow said that the board of directors has engaged Deloitte as special auditor to investigate allegations in the letters, excluding certain allegations that pertain to ‘the personal affairs of third parties’.
Mr Ow said that a letter had also been addressed to the white collar crime unit, the Commercial Affairs Department, and added that CAD had reviewed the information and ‘could not find a basis to pursue the matter’. He said that Deloitte would report the result of its investigations to the company’s audit committee in due course.
The poison pen letters are understood to be unrelated to E3’s recent attempt to seek an extension of time to hold its annual general meeting, which had been due by the end of the month.
Separately, Reyphon Agriceutical, which produces gibberellic acids, a plant growth regulator, yesterday announced that its principal subsidiary ‘may face shortfall of working capital’ due to ‘poor operation management’.
Reyphon, a subsidiary of SGX-listed Sinomem Technology, said that it was reorganising its subsidiary’s board of directors and management, and may even shut down production plants in Jiangxi province.
The company said that its subsidiary Jiangxi New Reyphon Biochemical (JNR) had ‘accumulated abnormally high inventories’ and that its management had also spent heavily to start a new business without informing the Reyphon board.
‘Consequently, JNR’s operating cash position has deteriorated significantly as a result of high inventories and the aforesaid capital expenditure,’ it said.
Reyphon said that JNR ‘may have difficulty in rolling over its bank loan and hence may face shortfall of working capital’.
The company said that it would try to collect trade debts and review the need for the new business in order to conserve working capital.
In its most recent results reported for the quarter to June 30, Reyphon had a negative net cash flow from operations of 11 million yuan (S$2.4 million). It held cash and bank balances of 67.5 million yuan and has a bank loan of 48.7 million yuan due this month.
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E3, Sinomem unit may be facing corporate governance issues
By CHEW XIANG
17 October 2008
(SINGAPORE) Two more companies with principal operations in China may have stumbled over corporate governance issues.
Yesterday, Catalist-listed E3 Holdings, which is developing a three sq km plot of land in Jilin province in China into oil and chemical production facilities, said that it had received seven poison pen letters in September.
The allegations in the letters are understood to pertain to issues surrounding some of the company’s recent projects, including a now withdrawn attempt to buy a stake in a Chinese oil refinery, as well as general concerns with the company’s recent strategy.
Last night, chief executive officer Jonathan Ow said that the board of directors has engaged Deloitte as special auditor to investigate allegations in the letters, excluding certain allegations that pertain to ‘the personal affairs of third parties’.
Mr Ow said that a letter had also been addressed to the white collar crime unit, the Commercial Affairs Department, and added that CAD had reviewed the information and ‘could not find a basis to pursue the matter’. He said that Deloitte would report the result of its investigations to the company’s audit committee in due course.
The poison pen letters are understood to be unrelated to E3’s recent attempt to seek an extension of time to hold its annual general meeting, which had been due by the end of the month.
Separately, Reyphon Agriceutical, which produces gibberellic acids, a plant growth regulator, yesterday announced that its principal subsidiary ‘may face shortfall of working capital’ due to ‘poor operation management’.
Reyphon, a subsidiary of SGX-listed Sinomem Technology, said that it was reorganising its subsidiary’s board of directors and management, and may even shut down production plants in Jiangxi province.
The company said that its subsidiary Jiangxi New Reyphon Biochemical (JNR) had ‘accumulated abnormally high inventories’ and that its management had also spent heavily to start a new business without informing the Reyphon board.
‘Consequently, JNR’s operating cash position has deteriorated significantly as a result of high inventories and the aforesaid capital expenditure,’ it said.
Reyphon said that JNR ‘may have difficulty in rolling over its bank loan and hence may face shortfall of working capital’.
The company said that it would try to collect trade debts and review the need for the new business in order to conserve working capital.
In its most recent results reported for the quarter to June 30, Reyphon had a negative net cash flow from operations of 11 million yuan (S$2.4 million). It held cash and bank balances of 67.5 million yuan and has a bank loan of 48.7 million yuan due this month.
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