THE Singapore Exchange Regulation (SGX RegCo) on Thursday (Feb 17) said it reported Tee International TEE Intl: M1Z 0% to relevant authorities for potential offences under the Securities and Futures Act, and is investigating the company for potential listing rule breaches.

 

This was in relation to the 121 letters of demand and overdue trade-related payables that Tee International and its principal subsidiaries had received from various creditors between July 2020 and June 2021.

 

The company had announced the claims - amounting to around S$38.8 million - in June 2021. It later said in its response to SGX queries that it did not do so earlier as it was in active negotiations with the creditors, and the amount claimed by each creditor was not material.

 

SGX RegCo noted that the aggregated claims accounted for more than or equal to 10 per cent of the group' s net asset value and cash and cash equivalent balances.

 

Hence, the claims were material information that would potentially impact the group' s ability to operate as a going concern, and should be disclosed promptly according to mainboard listing rules.

 

SGX RegCo said while disclosure may not be necessary if the claim or action could reasonably be characterised as " bound to fail" , " mere optimism of an impending settlement of the claim or legal advice obtained on the likely success of winning the case are not sufficient to meet the high bar of ' bound to fail' " .

 

It highlighted that Tee International has defaulted on its debt repayment and received a demand letter of material quantum, which suggests that the claim was meritorious and the event of default had occurred.

 

Under the SGX mainboard' s listing rules, issuers must announce any information concerning it and its related companies if it can materially affect the price or value of its securities.

 

They should also disclose defaults, as well as claims and lawsuits if the amount or action has a material impact - notwithstanding that negotiations are ongoing or the outcome of the lawsuit is not yet known.

 

" The exchange regards disclosure as fundamentally important to the operation of a fair and efficient market and will not hesitate to take enforcement actions against errant parties," SGX RegCo said.

 

Shares of Tee International last closed flat at S$0.032 on Jun 15, 2021. The company had requested for a voluntary trading suspension, as it was reviewing its existing business amid a significant loss reported for its fourth quarter ended May 31, 2021.

MAINBOARD-LISTED Tee International has inked a non-binding term sheet to issue 2 investors a total of S$7 million worth of subscription shares, the engineering services company announced on Friday (Jan 28).

 

As part of the deal, the investors will also be granted options to require Tee International to issue new shares worth up to S$7 million to themselves or their designated nominees.

 

Proceeds from the proposed subscription of new ordinary shares - after deduction of expenses - shall be used for the working capital purposes of the group and to fund the growth of its businesses.

 

The S$7 million proceeds from the issue of option shares will grant the group further access to funds for its future growth and expansion, Tee International said.

 

The 2 investors are Chong Sin Kiong and Tan Keng Soon, who are unrelated to each other.

 

Chong, who has agreed to invest and subscribe for S$6.02 million of the subscription shares, is the founder and managing director of Wah Loon Group. The company provides mechanical and electrical engineering services.

 

Tan will subscribe to S$980,000 worth of the company' s subscription shares. He is co-founder and managing partner of Dymon Asia Capital Singapore, an alternative investment manager.

 

On top of the proposed investment, Tee International and its wholly-owned subsidiary, PBT Engineering, are proposing to undertake a debt restructuring exercise for the settlement of their current unsecured financial liabilities via issue of new shares and/or payment in cash, the company said.

 

The exercise will be by way of a scheme of arrangement to be approved by the creditors of Tee International and PBT Engineering, and sanctioned by the order of the High Court of Singapore.

 

Tee International' s shares have been suspended from trading since Jun 19, 2021. The company and its wholly-owned subsidiaries - with the exception of Trans Equatorial Engineering, which has been placed under creditors' voluntary liquidation - have been granted moratoria relief up to Mar 31, 2022.

 

This comes after a review of the group' s businesses and operations by financial consultant RSM Corporate Advisory, following the incurrence of significant losses for its fourth quarter ended May 31, 2021.

 

The deal with the 2 investors is conditional upon the group' s debt restructuring exercise being seen through, as well as its terms and conditions being satisfactory to both investors, among others.

 

According to Tee International, the proposed investment will allow for " certainty of funding" for the group' s working capital requirements following its debt restructuring exercise, and is " vital for its continuity" .

 

It will also allow the group to access funds to improve its cashflows and continue as a going concern, added the company.

 

Following the issue of subscription shares, Chong and Tan will hold about 43.1 per cent and 7 per cent of the enlarged share capital of Tee International respectively.

 

Assuming that they exercise the investor options granted to them within the first 12 months, this will result in Chong holding about 56.9 per cent of the enlarged share capital, and Tan holding 9.2 per cent.