Loyz Energy, lender in row over S$4m loan

Singapore

A LEGAL tussle appears to be brewing between Singapore-listed oil and gas company Loyz Energy and Advance Capital Partners over a S$4 million loan.

In an announcement to the Singapore Exchange (SGX) on Friday, Loyz Energy said the company had on Sept 10 been served a writ of summons issued by plaintiff Advance Capital Partners claiming that Loyz Energy had failed to repay a S$4 million loan. Loyz Energy said that it considers the claim to be without merit.

Then in a subsequent announcement to the SGX, also on Friday, Loyz Energy said that it had filed an application to strike out the writ of summons on the basis that the writ, among other things, discloses no reasonable cause of action. Loyz's application is fixed for hearing on Oct 8.

Loyz Energy is said to have on July 11 this year received a six-month loan of S$4 million from Advance Opportunities Fund (AOF), which is understood to be managed by Advance Capital Partners.

Then, on Sept 10, about four months shy of the loan agreement's maturity date, the writ of summons was issued to defendant Loyz Energy by ACIES Law Corporation, the plaintiff's solicitors, in a bid to claim the original loan sum of S$4 million, plus interest and other expenses.

The writ states that Loyz Energy must, within eight days after the service of the writ, satisfy the claim or enter an appearance for the hearing date on Oct 16.

As to why the loan repayment demand was made prior to the stipulated maturity date written on the loan agreement, AOF founder Tan Choon Wee said that "as far as we are concerned, the loan is defaulted already when the ELN (a proposed equity-linked notes subscription) was rejected by (Loyz Energy) shareholders at the EGM (extraordinary general meeting) and we have commenced legal proceedings".

Prior to the date of the loan agreement, on July 1 this year, Loyz Energy had entered into a subscription agreement with AOF, in which AOF had agreed to issue to the defendant one per cent convertible notes (the ELN) in aggregate principal amount of up to S$60 million comprising three tranches of a principal amount of S$20 million each.

In an announcement on July 2 this year, Loyz Energy's managing director Adrian Lee said that the company would not, pursuant to the issue of convertible notes, issue securities to transfer a controlling interest without the prior approval of shareholders of the company.

The EGM was conducted on Aug 27 this year, and the defendant's shareholders did not vote in favour of the subscription agreement.

In the statement of claim, which is attached along with the writ of summons, the plaintiff avers that the loan agreement was to enable the defendant to have access to the sum of S$4 million, which it urgently required pending the commencement of the ELN facility in accordance with the terms of the subscription agreement.

The statement of claim also states that the defendant's representative Jimmy Seah, who was Loyz Energy's chief operating officer at the material time, had orally represented to AOF's representative, Tan Choon Wee, that Loyz Energy urgently required the S$4 million to meet its immediate financial commitments.

Other oral representations also made by Mr Seah to Mr Tan, as written on the statement of claim, were that "the terms of the subscription agreement will be approved by the majority shareholders of the defendant at the proposed EGM", and that "the entire objective of the loan agreement was to allow the defendant to have this short term financing pending the commencement of the ELN facility pursuant to the terms of the subscription agreement".

Also written in the statement of claim as said by Mr Seah was: "The only reason to stipulate a period of six months as the maturity date in the loan agreement was to give the defendant sufficient time to conduct the EGM for the purposes of the formal process of obtaining shareholders' approval for the terms of the subscription agreement."

Mr Seah was not available for comments when BT called for a phone interview on Friday. According to Loyz Energy, he had already resigned from his position at the company.

On Sept 3, the plaintiff, through its solicitors, made a demand for the repayment of the loan together with all accrued payments.

According to the statement of claim, "the defendant has failed and/or refused to make payment of the loan and the said accrued payments".

In BT's phone interview on Thursday with Loyz Energy's Mr Lee, he confirmed that "there was a loan disbursed in July, (the) loan was governed by a loan agreement set for six months, due in January 2015".

He also acknowledged that the ELN was voted out at the EGM, and that the programme will not carry through. But he stressed that the S$4 million loan and the S$60 million ELN were two different things.

Mr Lee said: "The entire loan is governed by the loan agreement ... we have never said that at any point in time we never want to pay, it is because the loan is not due yet ... I think they are being capricious by demanding immediate payment."