SGX tells Innopac to engage valuer for businesses it plans to sell
The Singapore Exchange (SGX) has ordered Innopac Holdings'
audit committee to engage a reputable valuer to assess businesses that the
company plans to sell at a sharp discount to their potential net tangible
value, Innopac said in an exchange filing on Thursday.
Innopac, an investment holding company, said in October that
it would dispose of its stakes in a number of businesses to Innopac chief
executive Wong Chin Yong for S$100,000. In response to SGX queries, Innopac
said on Nov 5 that it would not engage a valuer due to cost issues.
But in a fresh round of queries, SGX raised concerns about
how Innopac was valuing the businesses being sold. Two of those businesses,
Wang Da Investments and Heritage Corp, have a net tangible liability of S$11.45
million. The rest of the businesses that are being sold, including a microalgae
joint venture, have a total net tangible asset (NTA) value of S$9.16 million.
If Innopac liquidated Wang Da and Heritage instead of selling them with the
other businesses, it would not have to offset the other businesses' positive
net tangible value against Wang Da and Heritage's net liability, SGX said.
"As the value at risk for the disposal assets have a
potential NTA of S$9.16 million versus a disposal consideration of only
S$100,000, SGX is of the view that a reputable valuer should perform a
valuation for this interested person transaction," Innopac said in the
announcement.
Innopac responded on Thursday night that its audit committee
will source for a suitable valuer.
The company said that because the two named businesses are
the subject of an ongoing claim for about S$15 million by its lender Saxo Bank,
liquidation might be met with objections from Saxo and be unsuccessful. It was
also not feasible to find buyers for the other entities within the timeframe
for its proposed share placement.
In response to a query about why it considers recovery of
its investments in Primeforth Renewable Energy as nil and has chosen to dispose
of it to the CEO as such when the recoverable amount under the contract is S$6
million, Innopac said Primeforth is held by an offshore company, and the location
of its assets are unknown, making it difficult and costly to enforce any action
to recover the investments.
Primeforth has also contested Innopac's claims and reserved
its rights to pursue legal action against the investment holding company.
Innopac reported a net loss of S$741,000 for the first
quarter of fiscal year 2019 ended Sept 30, compared with a net loss of
S$436,000 a year ago.
Leila Lai
17 November 2018
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