Management questioned on pledged shares, default on convertible bonds and disagreements with former directors.
By Lynette Khoo 25 April 2009
Shareholders saw red at the annual general meeting (AGM) of Guangzhao Industrial Forest Biotechnology Group yesterday, querying the management on various issues - from pledged shares, default on convertible bonds to the disagreements with former independent directors.
The continued share trading suspension and apparent lack of transparency of management also stoked the anger of some shareholders.
During the AGM, which saw a turnout of more than 40 shareholders, a 30-minute inspiring speech by chairman Su Min was soon followed by a heated three-hour exchange between management and shareholders.
‘If the company is so confident of its prospects, it should resume trading and let the market decide,’ one shareholder asserted.
Some shareholders voiced their unhappiness over the pledging of shares by chairman Su Min and CEO Song Xuemeng for personal loans. They were afraid that these debts, if left unresolved, will still weigh on the shares when trading resumes.
The two honchos - who each had pledged their shares for personal loans - said they expect to fully repay their debts before trading of shares resumes.
‘We have been talking to the banks. We believe that when the shares resume trading, there won’t be margin calls,’ Mr. Song said. The duo are repaying the loans now and expect to clear the debts before the trading resumes.
Ms Su said at the AGM that the group has, as required by SGX rules, submitted a plan to the exchange with a view to resuming trading of shares by Sept 12.
Shares of Guangzhao have been suspended from trading since September last year due to a default on US$8 million worth of convertible bonds issued to a Goldman Sachs subsidiary Liberty Harbor LLC and to avoid the margin calls on pledged shares.
Ms Su told shareholders that they have a plan that has the support of all parties, including Liberty Harbor.
But one banker and financier in his 30s, who acted as a proxy, voiced his scepticism over this claim as Liberty Harbor had just on April 15 issued a statutory demand to Guangzhao.
Ms Su explained that upon receiving the letter, the group has undertaken further talks with Liberty Harbor and will soon submit a plan to them after their meeting with the new independent directors.
Shareholders also pressed for greater clarity to the disagreements the management had with the former independent directors, who had suddenly resigned last month.
Ms Su said the management did not agree with the advice of the former independent directors to cut all its trees and sell them to clear its liabilities as this would stave off future prospects of the company.
‘In good times, we could sell the trees for 80 million yuan (S$17.43 million). But now, we could only sell them for 50 million yuan,’ added Mr. Song. ‘We want to find a better solution without compromising shareholders’ interest.’
Only after much probing by shareholders, Mr. Song disclosed what the alternative plans were.
The group has planned to inject an asset owned by Mr. Song and Ms Su into the group in a related party transaction. This is a high quality fertiliser project that would boost Guangzhao’s business as its poplar products take a hit from lower packaging as exports and construction projects slump.
The second option is to expedite its logging schedule in Jiangxi, where the process was delayed by a snowstorm last year. Mr. Song said he had no idea why the former independent directors disagreed with the two options. The mandarin-speaking CEO felt it could be due to communication problems as the meetings were conducted in English.
Other shareholders also took issue with the material uncertainties that caused external auditors Morre Stephens LLP to disclaim its audit opinion for the group’s fiscal 2008 results.
Ms Su explained that some documents came in after the balance sheet date. For one, the auditors could not ascertain the recoverability of carrying amounts relating to two plots of land in Shanxi province because the valuation report by a PRC valuer came thereafter.
All the resolutions were passed at the end of the AGM, but only after several questions from the floor. Three resolutions had to be passed by way of poll.
Insider story, as revealed by GZ staff whom had resigned:
1. All IDs can listen and speak Mandarin.
If IDs cannot communicate in mandarin, this issue would have surface three years ago.
So, what is really happening?
2. JiangXi pine forest is not affected by last year's snow storm. Pine forests with its needle-like leaves, unlike the other poplar (broad-leaf), are not affected by snow.
So, who is telling the truth?
3. Go check up on Sino-forest web-site to see that price of timber in China has not changed too much. Ex-GZ staff do not believed the reasons that Jack Song gave.
4. On the book, GZ has RMB 500 millions worth of trees. It owes Liberty Harbour (Goldman Sacs) only USB 8 million (RMB 60 mil, including interests). It should be easy to solve this debt?
So, what is really happening?
5. Where can Jack Song and Su Min find the money to pay for their own personal 7-10 million SGD margin calls?
Will anyone lend them more money in this climate and their bad track records?
4 comments:
Shareholders see red at Guangzhao AGM
Management questioned on pledged shares, default on convertible bonds and disagreements with former directors.
By Lynette Khoo
25 April 2009
Shareholders saw red at the annual general meeting (AGM) of Guangzhao Industrial Forest Biotechnology Group yesterday, querying the management on various issues - from pledged shares, default on convertible bonds to the disagreements with former independent directors.
The continued share trading suspension and apparent lack of transparency of management also stoked the anger of some shareholders.
During the AGM, which saw a turnout of more than 40 shareholders, a 30-minute inspiring speech by chairman Su Min was soon followed by a heated three-hour exchange between management and shareholders.
‘If the company is so confident of its prospects, it should resume trading and let the market decide,’ one shareholder asserted.
Some shareholders voiced their unhappiness over the pledging of shares by chairman Su Min and CEO Song Xuemeng for personal loans. They were afraid that these debts, if left unresolved, will still weigh on the shares when trading resumes.
The two honchos - who each had pledged their shares for personal loans - said they expect to fully repay their debts before trading of shares resumes.
‘We have been talking to the banks. We believe that when the shares resume trading, there won’t be margin calls,’ Mr. Song said. The duo are repaying the loans now and expect to clear the debts before the trading resumes.
Ms Su said at the AGM that the group has, as required by SGX rules, submitted a plan to the exchange with a view to resuming trading of shares by Sept 12.
Shares of Guangzhao have been suspended from trading since September last year due to a default on US$8 million worth of convertible bonds issued to a Goldman Sachs subsidiary Liberty Harbor LLC and to avoid the margin calls on pledged shares.
Ms Su told shareholders that they have a plan that has the support of all parties, including Liberty Harbor.
But one banker and financier in his 30s, who acted as a proxy, voiced his scepticism over this claim as Liberty Harbor had just on April 15 issued a statutory demand to Guangzhao.
Ms Su explained that upon receiving the letter, the group has undertaken further talks with Liberty Harbor and will soon submit a plan to them after their meeting with the new independent directors.
Shareholders also pressed for greater clarity to the disagreements the management had with the former independent directors, who had suddenly resigned last month.
Ms Su said the management did not agree with the advice of the former independent directors to cut all its trees and sell them to clear its liabilities as this would stave off future prospects of the company.
‘In good times, we could sell the trees for 80 million yuan (S$17.43 million). But now, we could only sell them for 50 million yuan,’ added Mr. Song. ‘We want to find a better solution without compromising shareholders’ interest.’
Only after much probing by shareholders, Mr. Song disclosed what the alternative plans were.
The group has planned to inject an asset owned by Mr. Song and Ms Su into the group in a related party transaction. This is a high quality fertiliser project that would boost Guangzhao’s business as its poplar products take a hit from lower packaging as exports and construction projects slump.
The second option is to expedite its logging schedule in Jiangxi, where the process was delayed by a snowstorm last year. Mr. Song said he had no idea why the former independent directors disagreed with the two options. The mandarin-speaking CEO felt it could be due to communication problems as the meetings were conducted in English.
Other shareholders also took issue with the material uncertainties that caused external auditors Morre Stephens LLP to disclaim its audit opinion for the group’s fiscal 2008 results.
Ms Su explained that some documents came in after the balance sheet date. For one, the auditors could not ascertain the recoverability of carrying amounts relating to two plots of land in Shanxi province because the valuation report by a PRC valuer came thereafter.
All the resolutions were passed at the end of the AGM, but only after several questions from the floor. Three resolutions had to be passed by way of poll.
Insider story, as revealed by GZ staff whom had resigned:
1. All IDs can listen and speak Mandarin.
If IDs cannot communicate in mandarin, this issue would have surface three years ago.
So, what is really happening?
2. JiangXi pine forest is not affected by last year's snow storm. Pine forests with its needle-like leaves, unlike the other poplar (broad-leaf), are not affected by snow.
So, who is telling the truth?
3. Go check up on Sino-forest web-site to see that price of timber in China has not changed too much. Ex-GZ staff do not believed the reasons that Jack Song gave.
4. On the book, GZ has RMB 500 millions worth of trees. It owes Liberty Harbour (Goldman Sacs) only USB 8 million (RMB 60 mil, including interests). It should be easy to solve this debt?
So, what is really happening?
5. Where can Jack Song and Su Min find the money to pay for their own personal 7-10 million SGD margin calls?
Will anyone lend them more money in this climate and their bad track records?
So, what is really happening?
No trees lah
usd 6 mil has been paid till date. Seems a good start for the group. How do u think, guanyu?
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