HC Surgical: Vanda 1 asked for early redemption of S$5m bond on 'amicable grounds'

HC Surgical Specialists on Wednesday said that Vanda 1 Investments, managed by Temasek's Heliconia Capital Management, had requested the early redemption of a S$5 million convertible bond on "amicable grounds" and that no specific reason was provided by the investor. 

The company was responding to queries by the Singapore Exchange on the rationale for the early redemption and whether it was related to the court judgement of surgeon Julian Ong's case, and/or the ongoing Singapore Medical Council (SMC) investigation. 

Last week, Dr Ong informed HC Surgical's board that the complaint made against him with the SMC will progress to a disciplinary tribunal. 

In June 2018, Serene Tiong lodged the complaint against the doctor, whose private practice is a 70 per cent-owned subsidiary of HC Surgical, claiming that he and another specialist colluded to have sex with "vulnerable" female patients.

Ms Tiong then forwarded the complaint to other doctors, prompting Dr Ong to file a defamation lawsuit against her. He lost the suit early last month, when District Judge Lynette Yap dismissed his action with costs, finding that Ms Tiong's claims were justified.

On April 17, HC Surgical said that it and Vanda 1 Investments entered into an early redemption and termination deed for the S$5 million convertible bond. Both sides agreed to the early redemption of the bond, the cancellation of the option for Vanda 1 Investments to invest a further S$5 million, and the termination of the investment agreement.

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In a bourse filing late on Wednesday night, HC Surgical noted that it had assessed its available cash flows at that point in time, including the availability of cheaper financing and agreed with the investor, Vanda 1 Investments, for the early redemption. 

"Given the strong strategic network, both locally and overseas, of the investor and Heliconia, the company wishes to maintain the cordial relationship with the investor and Heliconia, should there be opportunities to cooperate again in the future," HC Surgical said. 

In addition, the company noted that it has used about S$2.8 million of the net proceeds from the convertible bond to fund the acquisition of Julian Ong Endoscopy & Surgery (JOES), and that it has not utilised the remaining proceeds. 

The group first bought 51 per cent of JOES in February 2017 for S$2.2 million, before raising its stake by 19 per cent in October 2019 for S$3.8 million.

HC Surgical added that as net proceeds from the convertible bond were not fully utilised and were meant to be used to finance the group's business expansion, there is no significant impact on the group from the early redemption for the financial year ending May 31. 

"Notwithstanding the redemption of the convertible bond, the directors are of the opinion that after taking into consideration the group's present banking facilities, the working capital available to the group is sufficient to meet its present requirements," the company said. 

As at 9.35am on Thursday, there were no trades in the shares of HC Surgical. The counter closed at 31.5 Singapore cents on Wednesday, up 0.5 cent or 1.6 per cent.