SINGAPORE - The unauthorised withdrawals in China announced earlier this week are not expected to be material, and its subsidiaries are independent of each other thus containing the group's risk exposure, said Myanmar and China property developer Emerging Town & Cities Singapore (ETC).
On Wednesday, ETC revealed that 118 million yuan (S$24 million) had been transferred without authorisation between July and October 2017 from its 60 per cent-owned subsidiary Huizhou Daya Bay Mei Tai Cheng Property Development Co to two companies controlled by ETC's majority shareholder, Luo Shandong.
ETC said on Friday morning (Nov 17) that the total amount of unauthorised withdrawals that has not been repaid as at Oct 25 this year is 106 million yuan, while Huizhou Daya Bay owes 112 million yuan to companies controlled by Mr Luo. If the latter amount is offset against the unauthorised withdrawals, there will still be a net amount owing from Huizhou Daya Bay to Mr Luo's controlled companies of six million yuan.
In addition to this, ETC owes Mr Luo about US$23.9 million pursuant to a convertible loan agreement dated Jan 27 this year.
Hence, on a net basis, the company and Huizhou Daya Bay in fact owes Mr Luo and his controlled companies 164 million yuan.
While certain monies can be expected from Huizhou Daya Bay's future business, "we are hopeful that our preventative actions including serving legal letter against select staff, will protect all or most of these monies". "In the event that it does not, our projections show that the amount we owe Mr Luo will continue to significantly exceed what can be taken", said ETC.
Furthermore, the Huizhou Daya Bay's bank account from which the unauthorised withdrawals were made has only about S$0.1 million left as at Oct 25.
"The board also wishes to advise that each of the company's subsidiaries which directly hold the group's interests in the various projects are totally independent of each other, henceforth containing the group's risk exposure," ETC added.
In a separate announcement, ETC said that it is changing the way it satisfies the consideration for the purchase of an 8 per cent stake in Uni Global Power from Asiabiz Services Ltd (ASL).
The acquisition amount of US$5.6 million, made through ETC's wholly owned subsidiary DAS Pte Ltd, was earlier to have been paid by the issuance of 84.3 million ETC shares to ASL.
Now, US$3.08 million will be paid by offsetting property units within the Golden City Project within 24 months after the date of completion; the value of each unit is to be based on the prevailing market price, and the choice of units to be offset will be mutually agreed by both firms.
The remaining balance of US$2.52 million will be satisfied through the issuance of 37.9 million ETC shares.
ETC has also requested an extension of its trading halt pending the release of a material announcement expected to be made before the market re-opens on Nov 20.
