Another lender demands Sunvic unit repay loan

SUNVIC Chemical Holdings' wholly-owned subsidiary, Jiangsu Jurong Chemical, has received another letter of demand.

This time, it is for the immediate repayment of a 35 million yuan (S$6.8 million) loan, which bears an annual interest of 13.5 per cent, mainboard-listed Sunvic said in a bourse filing on Friday.

The lender, Xiangshui City Asset Investment Holding Group (XCAIH), sent the letter of demand dated Dec 13 to Jiangsu Jurong after the loan came due on Dec 12.

Sunvic said there will be a material and adverse impact on the group's financial position, business and operations, in the event that XCAIH commences legal proceedings against Jiangsu Jurong and if Sunvic is unable to repay the loan.

The loan is secured by land use rights held and buildings owned by Jiangsu Jurong, as well as a corporate guarantee by Yixing Danson Technology and personal guarantees by Yang Guoqiang and Hu Yanping.

Yixing Danson Technology is owned by Sunvic's outgoing chief executive officer (CEO) Sun Xiao, who has resigned and will leave the company on Feb 8, 2020. Meanwhile, executive director Mr Yang has also quit and departed the firm in November. Mr Sun and Mr Yang's resignations came after Sunvic's audit committee recommended disciplinary action against them for their involvement in corporate guarantees provided for 222.5 million yuan in loans.

Mdm Hu is a substantial shareholder of Sunvic and also Mr Sun's mother.

XCAIH's sole shareholder is the Office of Xiangshui County State Owned Asset Management Committee, a third party unrelated to Sunvic.

Jiangsu Jurong had obtained the 35 million yuan loan from XCAIH in November, to repay a 34.2 million loan provided by another lender, China Construction Bank Corporation (CCBC).

The CCBC loan came due this August, after which Jiangsu Jurong received a letter of demand from CCBC for its immediate repayment. The loan was used for Jiangsu Jurong's working capital.

According to an Oct 2 filing, Jiangsu Jurong and its subsidiary also received four other letters of demand from other Chinese banks. The total amount due and repayable from those four loans plus the CCBC loan had been 166.1 million yuan, the Oct 2 filing stated.

Trading in Sunvic Chemical shares has been suspended since Jan 14 on the company's request. The counter last traded at 2.2 Singapore cents.