THE 8 shareholders of ecoWise Holdings who have requisitioned an extraordinary general meeting (EGM) have taken issue with the company' s statement issued on Wednesday (Mar 16).

 

In a letter addressed to ecoWise' s board and sponsor and seen by The Business Times, the shareholders sought to clarify that a previously requisitioned EGM was not, as ecoWise claimed, " voluntarily postponed" . The EGM did not take place earlier because of a temporary injunction obtained by ecoWise' s director and deputy chief executive Cao Shixuan, they said.

 

The shareholders, who collectively own an 11.3 per cent stake in the environmental solutions provider, intend to convene an EGM on Apr 14 to remove Cao from all his roles within the company and its associates. They have also put up 3 new directors for appointment.

 

But they claim ecoWise' s latest statement about the voluntary postponement of the previous EGM " diminishes the credibility of the upcoming EGM" , and that a shareholder would take the upcoming EGM " less seriously" .

 

In their letter, the shareholders also noted that there have been developments in litigations involving Cao, ecoWise and other directors of ecoWise, but that these developments have not been disclosed to shareholders.

 

The shareholders said they had been " contacted by our fellow shareholders" , with questions about the voluntary withdrawal and why the shareholders had now changed their minds and were now trying to convene another EGM.

 

" To be clear, we did not change our mind - we commenced preparations to convene the upcoming EGM as soon as the temporary injunction lapsed," they said.

 

These 8 shareholders were part of a group of shareholders that had intended to convene an EGM on Nov 26 last year, also with the aim of removing Cao and appointing new directors.

 

On Nov 24, ecoWise announced that Cao had on Nov 12 applied for an injunction against the convening of this EGM application, and that, " given this application, the board is unable to give further information as to when or whether the EGM will take place" .

 

The shareholders have clarified in response to questions from BT that in light of the pending court hearing, they did at the time choose to postpone the EGM to allow the court process to take place.

 

Cao' s application was dismissed on Dec 3, 2021. He then appealed the decision, and asked for a temporary injunction while awaiting the results of this appeal. This temporary injunction was granted. But Cao has since withdrawn his appeal, and the shareholders are now free to pursue the EGM once more.

 

The statement by ecoWise on Mar 16, informing shareholders about the requisitioning of the EGM, also highlighted 3 shortcomings of the shareholders' requisition notice.

 

One was that the notice of the EGM did not specify the " background and reasons" behind each of the proposed resolutions.

 

Responding to this, the shareholders said they did not believe this background was necessary. They noted that the shareholders of Rich Capital Holdings and Ntegrator International, for example, had also called for EGMs without offering reasons for each resolution.

 

Also, ecoWise said that required information about the new directors has not been given to shareholders.

 

But the requisitioning shareholders said this information was in fact provided in a link within the text of the EGM notice. They noted that the 3 proposed directors - Danny Oh Beng Teck, Gan Fong Jek and Tan Poh Chye Allan - are the same individuals proposed previously, and have also been interviewed by ecoWise' s sponsor. " The relevant Catalist rules have been complied with," they said.

 

Finally, ecoWise noted that the given deadline for CPF and SRS investors to approach their CPF agent banks and SRS operators if they wish to exercise their vote is " inaccurate" . The date given in the EGM notice is Apr 8, when it should have been 7 working days before the EGM.

 

The requisitioning shareholders said the date is indeed inaccurate, but that there was no breach of any law or regulation that would prohibit the EGM from being validly convened and held.

 

" The important rule is for shareholders' proxy forms to be submitted 72 hours prior, by Apr 11, 2022, 2.30 pm, and we have complied," they said.

CHASED by several banks for payments and unable to pay the security deposit for extending its lease, ecoWise said in a filing on the Singapore Exchange (SGX) on Wednesday (Mar 16) that these developments indicate " material uncertainty" of the company' s ability to continue operating.

 

The filing from the environmental solutions provider was in response to queries from the bourse operator on the board' s assessment of the company' s ability to continue operating as a going concern.

 

It had announced through a series of filings, after the release of its financial results on Mar 1 this year, that several banks in Malaysia had been chasing ecoWise for payment.

 

MayBank, Al Rajhi Bank and Affin Bank had sent letters of demand or reminders to ecoWise' s subsidiaries requesting payments totalling over RM3 million (S$974,927) that are overdue.

 

In its latest update on Wednesday, the embattled company said that Public Bank had sent 3 letters of reminder over the past month over instalments that amounted to RM11,524 that were due in February this year.

 

Affin Bank had also sent a reminder letter to the company to pay RM89,000 that is due by Feb 28, and another bill totalling RM2.7 million which will mature in March and April this year. The bank has stopped any further use of ecoWise' s trade finance facility until the overdue amount has been repaid.

 

The company also said that Al Rajhi Bank has agreed to extend the deadline for it to pay an outstanding amount of RM407,841.10 to Mar 18 this year.

 

" The group is in discussions with the financial institutions and will update shareholders as and when there are material developments on this matter. The group will also explore other measures to manage the current cash flow situation of the group and ensure the sustainability of the group' s business," read the filing.

 

EcoWise also said that its board has invited external professional firms to help the company negotiate with banks and assess the longer-term viability of various aspects of its business.

 

SGX had also asked ecoWise for more details on its inability to pay a security deposit of S$691,200 to the National Environment Agency (NEA) for extending its existing lease on a property.

 

EcoWise had first notified SGX, in a filing on Mar 3, that the security deposit had not been paid to NEA even though the lease renewal was signed on Nov 17 last year.

 

In its response to these queries on Wednesday, the company said that the lease is for its recycling plant located at a site in Sarimbun Recycling Park in Lim Chu Kang. NEA and ecoWise agreed to extend the lease by another 17 months from Jan 15 this year, and a security deposit equivalent to 36 months had to be paid to NEA.

 

EcoWise had been using this recycling plant to recycle horticultural and wood waste generated within Singapore for more than 10 years.

 

However, the company said it is unable to make the payment due to its current financial position.

 

NEA has agreed to extend the deadline for the company to pay the security deposit by Mar 28 this year, and ecoWise is discussing with an insurance broker that could help them secure an insurance company to pay the security deposit in the form of an insurance performance bond to NEA.

 

When asked how ecoWise business operations would be affected if it is unable to make payment, it said in the Wednesday filing that the company would have to find alternative sources of raw materials for its renewable energy business, which will increase its cost of operations, as the raw materials are currently sourced from this recycling plant.

 

" If the group is not able to procure such alternative sources of raw materials, it will not be able to fulfil its contracts with its customers and may be subject to penalties from these customers," read the filing.

EIGHT shareholders of beleaguered ecoWise Holdings have sounded their intention to convene an extraordinary general meeting (EGM) on Apr 14 via electronic means to remove deputy chief executive Cao Shixuan from both his office as a director of the group and all his appointments with the company and its associated firms, as well as to appoint 3 new directors.

 

These shareholders collectively own some 107 million ordinary shares of ecoWise, or a collective stake of about 11.3 per cent. Two of the 8 shareholders were also part of the group of shareholders that had requisitioned for an EGM to be held on Aug 13 last year to remove Cao from his position, among other resolutions.

 

This EGM, however, did not proceed as Cao had obtained an interim injunction from the High Court to prohibit the convening of the EGM.

 

All of the 8 shareholders were also part of the group of shareholders that called for another EGM to be held on Nov 26 last year, but this EGM also fell through due to a " voluntary" postponement.

 

The 3 new directors that these shareholders have put forth to be elected as non-executive directors of ecoWise with effect from the date of the EGM are Danny Oh Beng Teck, Gan Fong Jek and Tan Poh Chye Allan.

 

No further details were given about these 3 people, only that they have reportedly provided the " relevant information" pursuant to the respective Catalist rules, and have been interviewed by ecoWise' s current sponsor W Capital Markets.

 

The resolutions do not appear to be interconditional. If the resolution to oust Cao is passed, the company will have only 1 executive director, Lee Thiam Seng.

 

If the 3 new directors are appointed, ecoWise will have 6 non-executive directors until the company' s next annual general meeting where shareholders can put the composition of the board to a vote.

 

ecoWise' s board of directors said the special notice and the notice of the EGM do not specify the background and reasons for each of the proposed resolutions that were tabled, and do not contain information relating to the proposed new directors that are required under the Catalist rules.

 

The board also flagged that the deadline set out in the notice of the EGM for CPF and SRS investors to approach their respective agent banks and SRS operators is inaccurate. ecoWise also does not intend to prepare a circular in respect of the EGM.

 

The EGM is slated for Apr 14 at 2.30 pm. The board said it will update shareholders as and when material developments arise.

 

In a separate filing on Wednesday (Mar 16), ecoWise revealed that recent developments indicate " material uncertainty" of the company' s ability to continue operating, in response to queries from the bourse operator on the board' s assessment of the company' s ability to continue operating as a going concern. Several Malaysian banks have been chasing the company for overdue payments totalling more than RM3 million (S$974,927).

 

The company is also still unable to pay a security deposit of S$691,200 to the National Environment Agency for extending its existing lease on a property due to its current financial position.