SINGAPORE (THE BUSINESS TIMES) - AGV Group warned on Tuesday night (Nov 23) that the lack of financial support amid Covid-19's impact on its business has resulted in a material uncertainty over its ability to continue as a going concern.
This comes amid the termination of its October share placement, and notice from its controlling shareholder who said he would not provide financial support for the company's cash gap in full.
As such, AGV does not intend to lift the trading halt on its shares, which has been in effect since Nov 19, 2021, and the company, on Wednesday morning before the market opened, requested a voluntary trading suspension until the issues can be addressed.
On Nov 10, the provider of hot dip galvanising services had said that 53 per cent of its production workers at its galvanising plant in Tuas have tested positive for Covid-19.
As the number of employees able to work are significantly reduced, AGV expected a material reduction to the production tonnage of its Singapore operations.
Then, AGV had said the probable decline in revenue and net income will likely not affect its ability to continue as a going concern and its ability to fulfil its near-term obligations, as it still had the share placement and it was making arrangements to allow for materials to be galvanised at the group's Malaysia plant instead.
But placees of AGV's share placement have since requested the termination of the share placement as they were not agreeable to a direct allotment and issue of shares. AGV had proposed the direct placement as its lender did not agree to effect the share lending agreement.
Furthermore, the company's controlling shareholder Chua Wei Kee said he would not provide for the company's cash gap up to March 2022, despite his earlier undertaking to provide financial support.
AGV said its board had reiterated that this would result in AGV becoming insolvent, but Mr Chua said he would only be willing to directly provide less than 25 per cent of the estimated four-month cash gap, and was firm in the amount of financial support that he is willing and able to provide.
AGV said it was working with its creditors, suppliers and customers "to endeavour to continue its business operations with minimal disruption while it sorts out this state of affairs".
Its shares last closed flat at one cent on Nov 18.