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Asiatravel suspends trading as controlling shareholder misses S$7.35m payment; auditor signals material uncertainty

ASIATRAVEL.COM Holdings has suspended trading with immediate effect, it said on Friday evening, after it said it has received queries from its creditors, suppliers and stakeholders on its financial position. This comes after its controlling shareholder missed a critical payment at end-June. 

The suspension also comes as the Catalist listing's independent auditor included a disclaimer of opinion over "material uncertainty which may cast significant doubt on the ability of the group and the company to continue as going concern". The company added that it is unable to show it is able to continue as a going concern as according to Catalist rules. 

The group's controlling shareholder missed a scheduled funding payment of S$7.35 milion to Asiatravel.com. The payment was due on June 30, 2018, and had been based on a binding note on the subscriber, ZhongHong Holding.  

"The completion of the note and receipt of the fund are critical to the group's continuing operations and payment of its debt. However, the fund was not received as per scheduled. The company is liaising with its controlling shareholder to find out when it can make the payment and will seek legal recourse to protect its rights."

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The company said the financial statements had been prepared on the assumption that payment will be made "in due course". "There is however no certainty that payment will be received," it added.

The group incurred a net loss of S$34.6 million for the financial period ended Dec 31, 2017. As at that date, the group's and company's current liabilities exceeded their current assets by S$10.99 million and S$0.44 million respectively.

Its independent auditor, Ernst & Young, has made a disclaimer of opinion on the 2017 financial statement, saying that "based on the information available to us, we have not been able to obtain sufficient audit evidence to satisfy ourselves as to the appropriateness on the use of the going concern assumption in the preparation of the financial statements".

As it is, the group's payment gateway service provider has exercised its alleged contractual rights and withheld payment of S$1.3 million to the group for contingent charge-back. 

"The company is in discussions with its advisers to determine the best course of action and the various options available to the group to secure its cash flow in a timely manner and to fend off any other creditors' claims," it said.

"The board has, following discussions with the company's sponsor, recommended that the trading of the shares of the company be suspended with immediate effect."