The banks backing Pteris Global have specified conditions for their continued financial support, according to a statement from the company.
One of the conditions: that Pteris' board remains "substantially unchanged" until Pteris' reverse takeover (RTO) by Tianda Group is completed.
This means that if Pteris major shareholder and director Winston Tan succeeds at his attempt to remove over half of Pteris board members before the RTO, the banks may recall their loans.
The struggling airport logistics services company said on Saturday that it had received a formal waiver letter from the banks on Apr 17 which stipulates that they would waive Pteris' breach of bank convenants for last year.
However, the waiver will only remain effective if the RTO goes through, which is expected to be done by Aug 31 this year.
In addition, the Pteris board of directors must also remain substantially unchanged until the RTO is completed.
Pteris had breached certain bank convenants in relation to loans worth $90 million from its principal bankers, which entitles them to request immediate repayment of the outstanding loans.
As part of the loan agreement, the company had to maintain tangible net worth of no less than $40 million at all times. Last year, however, Pteris only had a tangible networth of around $34 million.
The Pteris board said Mr Tan's move to oust half the current board members would likely jeopardise the RTO and have a negative impact on the company's financial health, especially if the banks recall their loans.
Tianda Group, a passenger boarding bridge manufacturer, proposed an RTO of Pteris last year. Tianda is owned by Chinese manufacturer China International Marine Containers (CIMC), the single largest shareholder of Pteris with a 15 per cent stake in the company.
Mr Tan, who holds 10.54 per cent of Pteris together with his wife, Ms Amy Lim, hopes to gather enough proxy votes to vote for the resolution to remove the directors at an extraordinary general meeting on Apr 25.