TEE International&rsquo s earlier plans to raise up to S$14 million through new share subscription and issue has fallen through after its 2 investors decided not to proceed with the proposed transactions, it said in an announcement on the Singapore Exchange on Tuesday (Aug 2).

 

This comes after the mechanical and electrical services group had earlier announced its entry into a non-binding term sheet to issue the 2 investors a total of S$7 million worth of subscription shares, and at the same time grant them the option to require the company 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 - were to be used for the working capital purposes of the group and to fund the growth of its businesses.

 

No reasons were provided for the investors&rsquo decision.

EMBATTLED mechanical and electrical services group Tee International : M1Z 0%has reported a return to profitability despite a plunge in turnover.

 

Second-quarter net profit was S$34.3 million in the 3 months to Mar 31, 2022, reversing a loss of S$6.1 million in the year-ago period, according to unaudited results last Saturday (May 14).

 

Revenue more than halved to S$17.6 million, from S$35.6 million in the year before &ndash mainly on plummeting sales in the engineering and construction segment.

 

Meanwhile, other operating expenses ballooned to S$38.0 million, from S$1.8 million previously.

 

Still, the bottom line was shored up by S$71.9 million in gains on the de-recognition of Trans Equatorial Engineering and its subsidiaries upon loss of control. Its wholly-owned Trans Equatorial unit was officially placed under creditors&rsquo voluntary liquidation in January 2022.

 

Tee International posted a half-year net profit of S$33.6 million, against a loss of S$6.9 million previously, even as revenue fell by 50.9 per cent to S$44.1 million, from S$89.7 million before.

 

Earnings per share (EPS) came to 5.30 Singapore cents for the 3 months, turning around from a loss of 0.95 Singapore cent previously. EPS was 5.20 Singapore cents for the half-year, against a loss of 1.07 Singapore cents before.

 

The group&rsquo s net asset value stood at a negative 22.7 Singapore cents a share as at Mar 31, 2022, compared with a negative 27.8 Singapore cents a share as at Sep 30, 2021.

 

Tee International&rsquo s outstanding engineering and construction order book was about S$44.7 million, with 5 ongoing projects as at end-March 2022, although the outlook statement cited headwinds such as a manpower shortage, supply-chain disruption, and rising input costs.

 

The board also noted that Tee International and its subsidiaries plan to propose a scheme of arrangement between the company and its creditors, and has separately entered into a non-binding term sheet with 2 investors for a possible restructuring process.

 

Despite challenges, the group will press on to form &ldquo strategic partnership with valued and synergetic partners to secure new projects and be vigilant on cash flow and cost management&rdquo , it said. The group will also work on divesting overseas infrastructure assets.

 

No dividend was recommended. The board cited &ldquo an accumulated loss-making position&rdquo and the need to manage cash flow in a &ldquo highly volatile and uncertain global operating environment&rdquo .

  Tee International on Friday (Feb 18) said it received an order on Feb 17 to produce various documents to the Commercial Affairs Department (CAD) to assist with an investigation regarding an offence under the Securities and Futures Act (SFA).

 

The new development comes just a day after the Singapore Exchange said it reported the mainboard-listed engineering group to relevant authorities for potential offences under the SFA. The bourse operator is also investigating the company for potential listing rule breaches.

 

All of Tee International' s independent directors, its non-executive director and the managing director of its engineering and construction business were also asked to assist with CAD' s investigations, the company said in a bourse filing. They have been interviewed by the CAD on Feb 17 and 18.

 

" None of the current directors or management personnel has been asked to surrender their passports," Tee International noted.

 

Under the CAD order, Tee International must provide CAD access to certain information and/or documents about the company and its subsidiaries related to claims made against them - including documents and correspondences.

 

The company must also produce financial and accounting computations and records, as well as the meeting minutes of the board and certain committees of the board. Corporate e-mails belonging to and IT equipment used by certain current and former directors and financial personnel will also need to be handed over.

 

CAD' s investigations appear to relate to matters which occurred during the Jan 1, 2020, to July 31, 2021 period, Tee International said. It added that the group' s executive directors and key management personnel present during that period have since resigned.

 

" Additionally, the current management and board have taken steps to ensure that improvements are made and proper procedures are put in place to monitor the claims received by the group and to escalate the same to the current board," the company said.

 

It does not expect the investigations to affect the group' s ongoing debt restructuring exercise or its business and operations as they relate to past matters.

 

Shares of Tee International last traded at 3.2 cents on June 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.

 

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.

 

ENGINEERING services company Tee International TEE Intl: M1Z 0% has started winding up its wholly-owned subsidiary Trans Equatorial Engineering on cash flow issues.

 

In a bourse filing on Thursday (Dec 16) night, the group said it has decided to proceed with the creditors' voluntary liquidation of the subsidiary as it could not pay its debts.

 

Earlier this month, Tee International had disclosed that Trans Equatorial had 136 claims against it amounting to S$128.9 million as at Nov 29.

 

In that same filing, Tee International revealed as well that it faces 3 claims amounting to about S$13.7 million, and that its other wholly-owned subsidiaries owe money as well.

 

PBT Engineering has 55 claims amounting to S$9 million, while its Malaysian subsidiary Tee E& C Malaysia has 13 claims amounting to RM5.9 million (S$1.9 million), it noted.

 

These claims were principally trade-related, arising from clients and subcontractors and the supply of goods and services to the 3 subsidiaries, Tee International had said.

 

Trans Equatorial was incorporated in 1980 and is mainly involved in the business of installing industrial machinery and equipment. It also provides mechanical engineering and electrical services.

 

Oon Su Sun and Lin Yueh Hung of RSM Corporate Advisory were appointed as Trans Equatorial' s provisional liquidators.

 

The group on Thursday declared that none of its directors, controlling shareholder or substantial shareholders has any interest, direct or indirect, in the voluntary liquidation of the subsidiary, save for their shareholdings in Tee International.

 

The news followed a public reprimand of Tee International and 2 of its former C-suite executives for breaching mainboard listing rules.

 

On Dec 3, the Listings Disciplinary Committee of the Singapore Exchange said the company had failed to control unauthorised remittances and disclose in its annual report - for the financial year ended May 31, 2019 - requisite information on interested person transactions.

 

This involves unauthorised remittances of money between its former executive director and group chief executive Phua Chian Kin, Oscar Investment, PBT and Trans Equatorial. Oscar is an investment holding company wholly and beneficially owned by Phua.

 

It was revealed that Phua had used the remittances to settle his personal debts, although he had on multiple occasions said the remittances were for business purposes.

 

Trading in Tee International' s shares has been suspended since June.