SINGAPORE - Catalist-listed SBI Offshore said on Thursday night (June 6) that is not able to repatriate US$3.2 million in funds from China to be placed in escrow due to regulations governing the remittance of foreign exchange.
It is exploring options to ensure its China escrow account is opened by July 2019 or it would consider repatriating its money in China through capital reduction and/or liquidation of its Chinese subsidiary Jiangyin SBI Offshore Equipment Co. This takes into account the costs and time needed, it said in a regulatory filing.
As at Feb 28, SBI Offshore has total cash of US$15.8 million, of which US$12.6 million is maintained by the group in Singapore, while US$3.2 million is maintained in China by Jiangyin SBI Offshore Equipment Co.
SBI Offshore is required to place no less than 90 per cent of that amount in escrow, which is around US$14.2 million.
The group said that it has not been able to repatriate its China funds to Singapore immediately through ways such as issuance of dividends, or remittance of royalties as certain pre-requisites must be met under existing rules and regulations in China governing the remittance of foreign exchange.
Thus, it has been exploring various options since March 2019, such as approaching financial institutions with a presence in China to open an escrow account with relevant and appropriate safeguards in China. If unable to do so by July, it will go ahead with the repatriation option relating to JSBI, through capital reduction and/or liquidation.
In the meantime, the group has provided an undertaking to the Singapore Exchange Regulation to safeguard its China monies until the escrow account is established.
For the bulk of its total cash located in Singapore, SBI Offshore was able to open its Singapore escrow account in March 2019, depositing around US$11.1 million with escrow agent CIMB Bank's Singapore branch, out of about US$14.2 million which is required to be placed in an escrow account.
It is required to place the balance of US$3.1 million with an approved escrow agent.
The group has also appointed executive non-independent chairman Mirzan Bin Mahathir, chief operating officer Mark Leong Kei Wei and chief financial officer Chong Wan Ling as authorised representatives.
Any two of its authorised representatives are able to jointly enter escrow agreements with agents, give notices or take action on behalf of the company regarding the escrow agreement.
Shares in the company have been suspended since March 21, 2019.