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HL Global Enterprises secures extension of loan repayment date till July 2018
SINGAPORE-LISTED HL Global Enterprises (HLGE) has entered into an agreement with a unit of China Yuchai International to extend a S$68 million loan by another one year to July 2, 2018.
This unsecured loan stemmed from the conversion of zero-coupon unsecured bonds of HLGE due in 2009 into an unsecured loan by Venture Lewis, a unit of China Yuchai.
The loan was subsequently extended every year from 2010 to 2015. In January 2016, the loan was extended for a further one year term until July 2 this year.
China Yuchai, a Hong Leong Asia subsidiary, has a deemed stake of 48.91 per cent in HLGE through wholly-owned subsidiary Grace Star Services. Hence, the 2017 agreement to extend the loan tenure by another year constitutes an interested person transaction.
Under the 2017 loan agreement, the principal terms are substantially similar to those of 2016, except that the SIBOR is used in arriving at the interest rate and the margin has been reduced from 0.5 per cent to 0.4 per cent per annum.
HLGE explained that given its financial position and performance, it has faced difficulties obtaining financing from financial institutions. Through the 2017 loan agreement, HLGE will continue to receive financial support from Venture Lewis, whose "support is still essential to ensure the company's ability to remain as a going concern".
"The highly competitive hospitality market resulting from the increased supply of hotel rooms and austerity measures will continue to adversely impact the group's operations in Qingdao," HLGE added.
For the nine months ended Sept 30, 2016, HLGE reported a net loss of S$1.1 million, compared to a net loss of S$2.3 million in the year-ago period; it has negative working capital of S$43.3 million as at Sept 30 and deficit of about S$5.8 million in shareholders' equity as of Sept 30.