As beleaguered door maker KLW Holdings seeks to recover $7 million in commitment fees from a firm and its main shareholder, it appears that these two parties are due to refund $2.8 million in deposits to another company soon.
Straitsworld Advisory and Mr Chan Ewe Teik are due to pay furniture firm Lorenzo International $2.8 million by Dec 7, according to an announcement that Lorenzo made on the Singapore Exchange on Sept 29.
These were deposits Lorenzo paid to Straitsworld relating to medical facilities that Straitsworld had proposed to sell to Lorenzo, according to a May 8 announcement by Lorenzo.
It said the refundable deposit of $2.8 million was part of an arrangement whereby both parties agreed not to solicit other proposals within a certain period that might hamper the chance of a deal on the medical facilities.
After this exclusive period was extended through various means, it would expire on Sept 7, according to a Sept 4 announcement by Lorenzo.
The deposit was to be refunded to Lorenzo without interest within seven days of expiry, according to the original agreement announced. Lorenzo, however, said it had given Straitsworld Advisory and Mr Chan until Dec 7 to refund the deposit.
In response to queries from the Singapore Exchange, Lorenzo said in its Sept 29 announcement that Straitsworld and Mr Chan had informed it that they could not repay the $2.8 million by the original deadline.
Lorenzo also said it took into consideration that "KLW had on Aug 28 announced it was taking steps to recover certain deposits from Straitsworld Advisory and Michael Chan" when deciding to grant the extension.
When contacted, Lorenzo deputy chairman Jeffrey Lim said Mr Chan is due to get back to the firm this Sunday on the payment. A Lorenzo director had written to Mr Chan just two days ago to remind him about the payment deadline, he added.
Mr Lim said Lorenzo had been "cautious" and always had key staff, which included management, independent directors and lawyers, present in dealings with Mr Chan. He said it involved such staff because the firm selling the medical facilities was a listed company and Lorenzo had signed a non-disclosure agreement.
He added that Lorenzo eventually decided not to proceed with the acquisition as it did not raise enough from a rights issue and because its sales had been weak.
When news on KLW broke, Lorenzo called an urgent meeting to make sure it did not have similar issues, he said.
On Wednesday, KLW said it had withdrawn its pending suit and filed another High Court lawsuit against Straitsworld Advisory and Mr Chan seeking the repayment of $7 million.
KLW has been in the spotlight recently, with two former key executives - Mr Lee Boon Teck and Ms Jaslin Gaw Kuan Ching - being investigated by the Commercial Affairs Department for possible breaches of law.