Emerging Towns & Cities suspends trading; to conduct review of Myanmar contract

EMERGING Towns & Cities Singapore (ETC) has voluntarily converted its trading halt into a trading suspension, and will engage an independent professional to review some of its dealings in Myanmar.

The review will also look at the group's fund-raising efforts in recent years to provide stakeholders assurance over the group's dealings, ETC said late on Tuesday.

The Catalist-listed property player had been queried last week by Singapore Exchange Regulation (SGX RegCo) after a campaign called Justice for Myanmar alleged ETC had "contributed millions" to the Myanmar army.

SGX RegCo had asked ETC and ETC's sponsor to comment on the allegations, which were posted online. SGX RegCo also asked for information on fund raising efforts by ETC and ETC's Golden City project in Myanmar.

The military coup in Myanmar has sparked protests and lately escalated into violence. Activists have been pressuring companies to sever ties with the country's military, which has significant business interests.

In its response, ETC said its dealings in Myanmar with the military have been in accordance with local laws that already involve the military.

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Golden City, a commercial and residential project in Myanmar, is being built on land leased from the Myanmar army.

ETC has an indirect 70 per cent equity interest in Golden Land Real Estate Development Co (GL), which owns the Golden City project. The remaining 30 per cent is owned by Nature Link Co, which is beneficially owned by Myanmar nationals.

In 2013, Nature Link won the bid for an open public tender to develop the land on which  Golden City currently stands. The tender was organised by Myanmar's Ministry of Defence, on behalf of the Myanmar government, ETC said.

GL has a build-operate-transfer (BOT) contract for an initial term of 50 years that began on Oct 15, 2013, and another two terms of 10 years each.

The Quarter Master General Office - the office of Myanmar's Commander-in-Chief - is the lessor and counter-party to the BOT. It is the government authority with the necessary rights to grant the BOT contract.

ETC therefore has to pay the fees for the lease of land into an account administered "under authority of the Quarter Master General Office", which is in turn administered by Myanmar's Ministry of Defence.

ETC said it has ensured GL "complies with its payment obligations under the BOT contract and all other applicable Myanmar financial and related laws", and that ETC "is entitled to assume that the application of funds administered by Myanmar government ministries is in conformity with existing provisions of Myanmar law".

On its fund raising efforts since the company’s investment in Myanmar, ETC said since the completion of sale-and-purchase agreements related to the GL acquisition, it has yet to complete any equity fund raising exercises.

On Jan 13, ETC announced that it had entered into share subscription agreements with two subscribers. The proposed placement exercise is subject to shareholder approval. 

The company is not looking into any other fund raising activities other than what has already been announced, it noted. 

ETC's board also confirmed that to the best of its knowledge and belief, the company has complied with all rules, laws and regulations, and remains suitable to be listed.

Nevertheless, the board has chosen to suspend trading as it is "mindful of the safety of its employees, especially its staff in Myanmar, and is committed to provide more clarity on the unsubstantiated and unverified allegation against the company".

Shares of ETC last traded at 3.4 Singapore cents on Feb 25, the day before it called for a trading halt.

READ MORE: Trouble in Yangon: Tracking the business impact of the military coup