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Huan Hsin's auditors draw emphasis of matter on RTO plans, liabilities

CHINESE electronics contract manufacturer Huan Hsin Holdings on Monday said its auditors have drawn emphasis to the group's current liabilities and the "material uncertainties" over its latest reverse takeover plan.

As an emphasis of matter, Deloitte said the group's current liabilities exceeded its current assets by S$50.3 million as at Dec 31, 2017. The group also posted losses of S$20.6 million for fiscal 2017.

"The preparation of the financial statements on a going concern basis is dependent on the successful completion and receipt of the proposed subscription and successful completion of the proposed reverse takeover," Deloitte said, noting the "material uncertainties which may cast significant doubt on the group's and company's ability to continue as going concerns".

Huan Hsin this month said it plans to buy a 99.99 per cent stake in Huangshan Zhongtian Weiliang Mining Co (Huangshan Mining Co) for S$1.06 billion. This would translate to a reverse takeover.

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Huangshan Mining Co is an investment holding company incorporated in China. It holds the entire interest in a vanadium mine located in China's Huangshan, along with a mining licence to mine vanadium ore of up to 115,000 tonnes per year from the Guocun Vanadium Mine - one of the largest sedimentary vanadium deposit in China, the group said.

The seller, Jade Merit, is an investment holding company incorporated in the British Virgin Islands on Feb 2, 2018. Its sole shareholder is Singapore citizen Yip Zhao Lin, who is said to have experience investing in the mining business. Since 2007, Mr Yip has also been the managing director of Sum V Energy, formerly known as China Minerals Group.

In conjunction with the acquisition, Huan Hsin has proposed a share consolidation to consolidate every 20 shares of the company into one share to allow the group to meet the listing requirement of having a minimum issue price of S$0.50.