USP Group in second board tussle; minority shareholders want new team at helm

SINGAPORE – USP Group shareholder Melvin Tan has linked up with some of the company’s minority shareholders to wrest control from the company’s board and inject new projects, including a lab-grown diamond business, into the watch-listed entity.

The other shareholders of USP will have the chance to vote on Mr Tan’s proposed board composition at an extraordinary general meeting (EGM) to be held online at 10am this Friday.

The resolutions include the removal of USP chief executive Tanoto Sau Ian and the company’s non-executive chairman Djohan Sutanto, as well as the appointment of four new directors – one of them an executive director.

In a letter to shareholders appealing for their support, Mr Tan said he hopes to “nurse USP back to good financial health and save the jobs of its dedicated workforce, comprising about 150 staff and workers”.

He said he has put together a team of experienced professionals with monetary resources and a pipeline of projects to revitalise USP.

The list of newly proposed directors comprises a consultant, an investment analyst, an accountant and the group general manager of Singapore-listed building maintenance company ISOTeam.

It has taken a long time for Mr Tan and the shareholders, acting in concert with him, to get this EGM under way.

Shareholders Hinterland Energy, Harmonic Brothers, Hia Yi Heng and Lim Shiwei submitted a notice of requisition last October, but USP’s board declined to convene the EGM.

The shareholders, who collectively control 12.2 per cent of USP, had to turn to Singapore’s courts to push the EGM through. Mr Tan is chief executive of Hinterland.

USP was listed on the Singapore Exchange (SGX) in 2007 as Unionmet (Singapore), a Chinese indium ingot maker. Indium is a metal commonly used in the semiconductor industry.

Since its listing, however, the company has faced an unending stream of problems. There have been lawsuits, disclosure problems and difficulties staying afloat.

It tried various means of diversifying its business, with varying degrees of success. Most of USP’s revenue today comes from the sale of marine equipment.

USP reported profits for its 2022 fiscal year ended March 31, and for the nine-month period ended Dec 31. But the company is unable to exit the SGX watch list because its financials have not yet been audited. Its auditors retired last year and new ones have not been appointed.

Somewhat ironically, Mr Tanoto joined USP’s board and management via a requisitioned EGM. In 2020, he was voted in by 58.8 per cent of shares represented at the EGM.

He now owns 21.2 per cent of USP, according to a circular issued for the April 21 EGM.

Mr Tan, in an interview with The Business Times, said USP badly needs to get off the watch list. If the company were to be delisted, it would no longer be able to tap the capital markets for funding, and it would be at the mercy of its creditors.

As at Dec 31, USP had $4.1 million in cash and cash equivalents, but it had $32 million in borrowings.

USP shares last closed at 10 cents.

On April 12, USP was handed a notice of compliance from SGX Regulation (SGX RegCo). The company has to appoint auditors to pore over its financials by May 31, 2023, and announce the results by a deadline agreed with the regulator.

Based on the results, it must apply to either be removed from the watch list, or to extend the cure period. If it does not comply, SGX RegCo will move to delist the company.

On April 17, USP said it has reached a full and final settlement regarding some legal matters dating back to 2020.

USP had been in a dispute for some years with Mr Oon Koon Cheng, who holds a substantial 28.8 per cent stake in the company, over a loan and damages relating to an acquisition.

Both sides have agreed to discontinue their suits. USP will pay Mr Oon and various other parties a settlement sum.

THE BUSINESS TIMES