When someone shares with you something of value, you have an obligation to share it with others.
Saturday, 13 December 2008
Zhonghui suspends share trading as debts cloud future
Zhonghui Holdings has suspended trading of its shares, citing uncertainties over whether it would be able to meet its financial obligations and continue as a going concern.
Zhonghui suspends share trading as debts cloud future
By LYNETTE KHOO 13 December 2008
Zhonghui Holdings has suspended trading of its shares, citing uncertainties over whether it would be able to meet its financial obligations and continue as a going concern.
The suspension starting yesterday was made at its request following a letter of demand from United Overseas Bank last week for repayment of two outstanding loans totalling about $19.6 million. UOB is also seeking payment for interest accrued.
Worried investors are eager to know the outcome of Zhonghui’s debt repayment negotiation with UOB and, in response, Zhonghui’s finance manager Cui Chengji has told BT that an announcement would be made next week.
The group had entered into agreement with UOB a year ago for a short-term loan facility and a term loan facility for an aggregate amount of up to US$13.2 million and an overdraft facility of up to S$1 million to finance an acquisition by its wholly owned subsidiary. The subsidiary, Shaanxi Zhonghui Environmental Conservation Corporation, acquired a 42.06 per cent stake in Baoji ZhongCheng Machine Tooling Co from Shaanxi Guangtai Industry (Guangtai) in June 2007 for 218.89 million yuan (S$47.7 million). The group is now seeking to partially divest its investment in Baoji to help repay the bank debt.
Zhonghui had said in its Q3 financial statement that a failure to divest Baoji or to sell the stake at a significantly lower value may render it unable to meet its obligations to the bank and raise doubts on its ability to continue as a going concern.
Its share of profits from Baoji has helped the group stay in the black for fiscal 2007 and the first nine months of this year, although the figures have not been audited under IFRS accounting standards. The ownership of the shares has not been transferred to Zhonghui yet, according to an announcement in April. This is still the case, Mr. Cui told BT this week in response to a query.
Zhonghui’s entitlement to the rights and interests in Baoji shares is based on a legal opinion issued by China lawyers.
Last month, Zhonghui appointed PricewaterhouseCoopers (PwC) as special accountants to assess its financial position and the issues raised by former independent director Lim Lian Soon following a query from the Singapore Exchange (SGX).
The issues included Zhonghui’s investment in Baoji, the claim of profits from the Baoji stake and the search for a buyer for the partial divestment.
Its stock was last traded at one cent, after a peak of 25.5 cents last December, triggering several margin calls on shares held by Zhonghui’s chairman and president Gao Bin. Mr. Gao’s stake is 31.69 per cent as at Sept 8. Some 4.96 per cent stake in Zhonghui is held by Capwest SA, the mutual funds managed by a French funds manager, as at June 12, after it started paring its stake in February. A 10 per cent stake is held by See Hoy Chan Investment Ltd, according to Zhonghui’s 2007 annual report. Going by these figures, about half of Zhonghui’s issued share capital should be in public hands.
1 comment:
Zhonghui suspends share trading as debts cloud future
By LYNETTE KHOO
13 December 2008
Zhonghui Holdings has suspended trading of its shares, citing uncertainties over whether it would be able to meet its financial obligations and continue as a going concern.
The suspension starting yesterday was made at its request following a letter of demand from United Overseas Bank last week for repayment of two outstanding loans totalling about $19.6 million. UOB is also seeking payment for interest accrued.
Worried investors are eager to know the outcome of Zhonghui’s debt repayment negotiation with UOB and, in response, Zhonghui’s finance manager Cui Chengji has told BT that an announcement would be made next week.
The group had entered into agreement with UOB a year ago for a short-term loan facility and a term loan facility for an aggregate amount of up to US$13.2 million and an overdraft facility of up to S$1 million to finance an acquisition by its wholly owned subsidiary. The subsidiary, Shaanxi Zhonghui Environmental Conservation Corporation, acquired a 42.06 per cent stake in Baoji ZhongCheng Machine Tooling Co from Shaanxi Guangtai Industry (Guangtai) in June 2007 for 218.89 million yuan (S$47.7 million). The group is now seeking to partially divest its investment in Baoji to help repay the bank debt.
Zhonghui had said in its Q3 financial statement that a failure to divest Baoji or to sell the stake at a significantly lower value may render it unable to meet its obligations to the bank and raise doubts on its ability to continue as a going concern.
Its share of profits from Baoji has helped the group stay in the black for fiscal 2007 and the first nine months of this year, although the figures have not been audited under IFRS accounting standards. The ownership of the shares has not been transferred to Zhonghui yet, according to an announcement in April. This is still the case, Mr. Cui told BT this week in response to a query.
Zhonghui’s entitlement to the rights and interests in Baoji shares is based on a legal opinion issued by China lawyers.
Last month, Zhonghui appointed PricewaterhouseCoopers (PwC) as special accountants to assess its financial position and the issues raised by former independent director Lim Lian Soon following a query from the Singapore Exchange (SGX).
The issues included Zhonghui’s investment in Baoji, the claim of profits from the Baoji stake and the search for a buyer for the partial divestment.
Its stock was last traded at one cent, after a peak of 25.5 cents last December, triggering several margin calls on shares held by Zhonghui’s chairman and president Gao Bin. Mr. Gao’s stake is 31.69 per cent as at Sept 8. Some 4.96 per cent stake in Zhonghui is held by Capwest SA, the mutual funds managed by a French funds manager, as at June 12, after it started paring its stake in February. A 10 per cent stake is held by See Hoy Chan Investment Ltd, according to Zhonghui’s 2007 annual report. Going by these figures, about half of Zhonghui’s issued share capital should be in public hands.
Post a Comment