SINGAPORE - Steel company Novo Group Ltd said on Wednesday (Sept 7) that China Citic Bank International Ltd has issued a letter of demand to its indirect subsidiary, Novowell ETP Ltd, in which Novo has a 95-per cent interest.
China Citic Bank is claiming for immediate repayment of an aggregate amount of US$14.3 million(S$19.25 million), which includes the outstanding principal and accrued interests, in banking facilities, Novo said in a filing to the Singapore Exchange.
The bank gave notice in the letter that payment is made by Sept 12, it may take further legal action as it deems necessary to safeguard its interests.
Novo said in the filing that, as it had earlier disclosed, China Citic Bank had executed a deed of release of the guarantee dated Dec 8, 2015, in favour of Novo. Following the said release, the bank facilities are no longer secured by any corporate guarantee by Novo.
Novo added that it believes that any potential default in payment by Novowell ETP will not have a direct material impact on Novo's cash flow or operations, given that Novo and Novowell ETP are separate legal entities, and Novowell ET does not have a material contribution to the operations of the group.
Notwithstanding the above, Novo said Novowell ETP and China Citic Bank are in discussions to resolve the alleged default and Novo will keep its shareholders updated on any material developments.