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Allied Tech's S$130m RTO of dorm operator called off amid news of missing S$33m at law firm

CATALIST-LISTED precision engineering firm Allied Technologies will not be buying construction, development and dormitory operator Aik Chuan Construction (ACC) and its subsidiaries, it said in a bourse filing on Wednesday night.

Allied Tech and Lim Yew Ming, who wholly owns ACC, had mutually terminated their memorandum of understanding (MOU) for the proposed acquisition of ACC’s entire issued share capital, with effect from May 22.

Both parties entered into the MOU on May 8, after Mr Lim sent a letter of intent for the proposed deal for S$130 million that could result in a reverse takeover.

Under the MOU terms, the proposed acquisition was subject to, among other things, the execution of definitive documents, including but not limited to a conditional sale and purchase agreement.

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No definitive documents were entered into in respect of the proposed acquisition, Allied Tech said in the Wednesday filing.

The proposed acquisition of ACC as indicated in the letter was to be satisfied by S$30 million and S$50 million cash with the balance through the issue of new Allied Tech shares at an issue price not exceeding one Singapore cent per share.

The termination of the ACC deal comes as S$33 million has gone missing from the clients’ account of boutique law firm JLC Advisors, with the funds believed to belong to Allied Tech. A senior lawyer at JLC Advisors has also become uncontactable, The Business Times reported on Thursday.

Allied Tech reported in a May 8 regulatory filing that its auditors had flagged some observations including S$33.4 million being held in escrow by JLC Advisors.

On the same day, Singapore Exchange Regulation ordered Allied Tech to "expeditiously procure the release" of the funds held with JLC Advisors and place them in an account opened with and operated by an escrow agent with a financial institution licensed by the Monetary Authority of Singapore.

SGX RegCo explained that this was to safeguard the cash and bank balances of Allied Tech.

BT understands that the S$33.4 million went missing before Allied Tech could transfer the funds to a new escrow account with a bank.

Allied Tech shares last traded at 1.1 Singapore cents on May 2, before it requested for a trading halt on May 3 and recommended on May 8 that the trading halt be converted to a voluntary trading suspension with immediate effect.