Net profit for the first half of this year for SunMoon Food Company was $140,000, reversing a net loss of $322,000 in the same period last year, but the good news has been overshadowed by a request from six shareholders for a meeting to remove the firm's executive chairman.
Revenue for the first half was $18.7 million, roughly unchanged from last year.
The investors did not provide their reasons for wanting to remove Mr Gary Loh, who is also the chief executive.
They had sent in a request last week, asking the fruit and dehydrated-produce distributor to hold an extraordinary general meeting (EGM) to pass a resolution to remove Mr Loh and appoint four new directors. Yesterday, SunMoon said its lawyers have advised that the request does not meet Companies Act requirements and it is seeking clarification from the six shareholders.
The move by the investors comes after First Alverstone Capital, a fund owned by Mr Loh and his wife, transferred, on July 28, 60 million SunMoon shares to parties who were creditors of the firm in 2013.
It is possible that, among these six shareholders, some may have received shares, giving them sufficient clout to demand an EGM.
The recipients of the First Alverstone share transfer have not been made public but one of them, Mr Robert Tan Kah Boh, probably received some stock.
A Singapore Exchange (SGX) filing showed that his SunMoon stake has risen from 2.84 per cent to 5.96 per cent.
The shares were likely transferred to fulfil part of a loan settlement agreement reached around September 2013 that involved SunMoon, its creditors and First Alverstone Capital.
SunMoon announced at the time that it had settled its remaining $24.4 million of legacy debt incurred in 2007. In September 2013, its creditors received $12.4 million in cash and $6 million in the form of six billion new settlement shares at 0.1 of a cent each.
Under the arrangement, First Alverstone Capital would pay the remaining $6 million of the legacy debt a year later in a separate share or cash deal.
If the recent share transfer relates to this $6 million due in 2014, it means that First Alverstone Capital was late with the payment. The value of the shares based on the market price on the July 28 transfer date was only around $3 million, below the $6 million required.
SunMoon's problems may also be exacerbated by a dispute with nTan Corporate Advisory.
In April 2014, SunMoon was sued by nTan for 2.06 billion shares or $2.06 million for allegedly unpaid fees, relating to services provided by nTan in "identifying and securing investors" around 2007 when it was in financial distress.
It is not clear if this has been resolved but First Alverstone also transferred shares to QAP Capital, an investment vehicle owed by the sisters of nTan founder Nicky Tan.
QAP is not among the shareholders calling for an EGM. Its stake in SunMoon went up to 7.93 per cent as a result of the share transfer.
The proposal to remove Mr Loh comes at a time when SunMoon has just clawed its way out of debt and revamped its business model.
Mr Loh had told The Straits Times earlier that SunMoon had sold many of its loss-making plantations and cold storage facilities and shifted its focus to distributing a wider range of fruit and fruit consumer products to more countries. SunMoon is also eyeing the Chinese market. Last month, it proposed acquiring a 51 per cent stake in Harvest Season Singapore as a way into the market.
Mr Loh said he expected sales to China to "dominate" the firm's fruit shipments due to strong demand.