Raffles Education shares dive as Oei's letter to board circulates in market

Singapore

THE stock of mainboard-listed Raffles Education (REC) was hammered to new lows on Monday (Oct 18) as the market got wind of a letter by tycoon Oei Hong Leong to the company's board.

The stock dived 26 per cent or S$0.021 to close at S$0.061 in the wake of a letter from Oei asking why REC's chief executive officer (CEO) and founder Chew Hua Seng had hired "all adult members of his family at high salaries".

The stock price has been under pressure for several months now following the company's disclosure that it was issued a writ by Affin Bank amounting to some RM410 million (S$132.7 million) on an unpaid loan.

Responding to SGX queries, the company said it was negotiating to settle the issue amicably with the bank, and was raising funds via the sale of various properties in China and Singapore.

Brokers said the stock sell-off on Monday was particularly vicious and came ahead of the company's annual general meeting on Oct 30, shaving its market value by a hefty S$29 million to S$84 million. The stock is down 37 per cent so far this month.

In the letter dated Oct 16, Oei referred to disclosures in the company's latest annual report.

He asked why CEO Chew's second wife Doris Chung Gim Lian received almost S$500,000 last year. His two sons from two marriages received S$200,000 each, while his first wife's daughter-in-law was paid S$100,000.

"These are just official family members," the letter said. "This is in addition to the amount of almost S$5 million paid to Mr Chew himself for his salary, bonuses and profit-sharing," the letter said.

Oei, who owns just over 10 per cent of REC, has been a vocal critic of Chew and REC over the past three years following a dispute over an alleged share buyback agreement with Chew which went sour. Oei has since lost his legal suit against Chew for settlement.

In a late Monday SGX filing, REC said it viewed Oei's letter as containing "bare allegations and material innacuracies which are not substantiated". It said it was taking legal advice and would respond to the letter in due course. THE STRAITS TIMES

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