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Midas slapped with letter of demand over 400m yuan loan

TROUBLED railway parts maker Midas Holdings has received a letter of demand over a 400 million yuan (S$83.3 million) loan to its subsidiary that was guaranteed by Midas, its former executive chairman Chen Wei Ping, and a third company, North East Industries Pte Ltd.

The loan from Advanced Manufacturing Industry Investment Fund was given out to Midas' unit, Jilin Midas Aluminium Industries.

"The guarantee was not reported to the board and the board became aware of the guarantee only after sighting the letter," Midas said.

The loan agreement allows an early redemption of the loan by giving 45 days of notice from the date of the letter to the borrower and the guarantors. Midas said if the borrower and the guarantors fail to repay the loan after 90 working days from the date of the letter, additional penalty will be imposed.

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Midas in February said it uncovered several litigations, enforcement orders and court documents involving companies within the group. These include an enforcement order filed against Jilin Midas Aluminium Industries, a wholly-owned subsidiary in China, for a previously undisclosed liability of 30 million yuan.

Midas is currently under investigation by Singapore's Commercial Affairs Department (CAD), which on Tuesday ordered the company to hand over financial documents, and a list of certain staff.

The documents include financial documents for the relevant companies in the group, as well as a detailed list of all persons who acted as the legal representative, general manager or financial controller of the relevant subsidiaries as well as specimen signatures of these individuals. The CAD is also seeking all relevant IT equipment and corporate emails of these persons.