A major shareholder of ailing Chinese electronics maker Huan Hsin is demanding answers on the status of its restructuring effort, following yet another quarter of disappointing earnings.
USP Group, in a letter yesterday to Huan Hsin, noted that the firm's total comprehensive loss before income tax (excluding exchange realignment) widened by more than 270 per cent from $5.5 million in the second quarter to $20.4 million in the third quarter.
"The fact that quarter-on-quarter results have worsened considerably is an indication that the management is not achieving its restructuring goals to lower costs, streamline operations and dispose of non-performing assets," Mr Li Hua, USP's executive chairman and chief executive officer, said.
USP also wants clarification on whether Huan Hsin, which is facing possible delisting from the mainboard next March, has asked the Singapore Exchange for an extension of time.
Huan Hsin was placed on SGX's watchlist in March last year, following three consecutive years of losses. The group may be delisted if it is unable to return to profitability or lift its market capitalisation above a set level by next March.
USP Group, which raised its stake in Huan Hsin to 16.2 per cent in March this year, also wants clarification on why the company's employee benefits rose 20.3 per cent from $11.8 million in the second quarter to $14.2 million in the third quarter.
It said this is "contrary to management's goal to streamline operations."
USP also wants to know how the incorporation of Huan Hsin's subsidiary, Greatest Innovation Investment, would help its restructuring effort.
It wants Huan Hsin's board to provide shareholders with an update on what RHB Corporate Finance has advised and what the firm has done with the advice given.
"We look forward to a detailed report instead of repeating the same found in the quarterly update," it said. It also wants Huan Hsin to convene a meeting for RHB to update shareholders on its progress and give shareholders the opportunity to make recommendations and vote on any course of action to be taken.