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New Silkroutes will consult SGX on need to seek shareholders' nod for planned deal
NEW Silkroutes Group said that it will consult the Singapore Exchange (SGX) on whether shareholder approval is required for a planned acquisition of a chain of traditional Chinese medicine clinics.
New Silkroutes said that it is also of the view that director Vivien Chen is still considered independent even though she is a selling shareholder in the proposed deal.
New Silkroutes, an oil and gas company, said on Sept 15 that it plans to buy a 51 per cent stake in privately held Healthsciences International (HSI) for S$2.2 million.
In its Sept 15 announcement, New Silkroutes disclosed that the net loss attributable to 51 per cent of HSI was about S$291,372 in 2015, which was about 6 per cent of the US$3.5 million net loss incurred by New Silkroutes in the year ended June 2016.
In its queries to New Silkroutes, SGX said that as long as negative figures were used to calculate that profitability ratio, the company must consult the exchange on whether shareholder approval is required. New Silkroutes replied that since HSI's loss relative to New Silkroutes' loss resulted in a positive percentage, the company did not think that it had to consult SGX, but will do so nevertheless.
SGX also noted that Ms Chen is a shareholder of HSI, along with non-independent New Silkroutes directors Lee Soek Shen and Goh Jin Hian. Ms Chen will receive S$389,657 in consideration as a result of the proposed deal. All three directors have agreed to abstain from voting on the deal.
New Silkroutes said that Ms Chen is still considered an independent director. Even though she is an interested party in the proposed acquisition, the transaction is a one-off deal and will not affect Ms Chen's judgment, the company said.