Scandal-hit Loh cousins seeking to offload their stake in Axington
Singapore
AMID mounting public scrutiny and a police report lodged by a "Big Four" accounting firm, Singaporean duo Nelson and Terence Loh are looking to off-load their recently-acquired stake in Catalist-listed Axington Inc, according to several sources.
The Business Times understands that the Loh cousins have approached several parties in the past weeks to buy out their Axington stake and there is a sense of urgency in their efforts given a looming loan of S$20 million.
It is not clear what was the specific purpose of the loan but according to one source, it could have been provided by DBS. When contacted, DBS declined comment. DBS was the adviser for the Lohs' vehicle Dorr Global Healthcare International in the general offer for Axington which was completed in mid-July.
Following the deal, the Lohs own a super majority stake in Axington, a professional advisory services firm which has been under the spotlight since the widely-scrutinised £280 million (S$506.6 million) bid last month for Newcastle United by Bellagraph Nova - a firm controlled by the Lohs and their partner Evangeline Shen.
A week ago, in filings to the Singapore Exchange, Axington clarified that Dorr Global's direct interest in the firm has fallen from 92.53 per cent to 77.88 per cent following a share placement exercise but due to an "administration oversight", the change had not been notified in time as required by the regulations.
Based on Axington's last traded price of 19 Singapore cents prior to the trading halt on Aug 26 followed by a suspension, the Lohs' stake in the firm is worth about S$28.2 million.
Axington had cash and cash equivalents of about RM79.1 million (S$26 million), based on the unaudited financial statements for the half year ended June 30, 2020.
BT's query to the Lohs drew no response.
Led by the new owners, the Axington board had earlier sought to switch Axington's name to NETX Inc and change its core business to medical and consumer wellness services, which would include robotics and artificial-intelligence technology.
Those plans have since fallen flat with a meeting to get shareholders' blessings scrapped after a series of bizarre events including doctored photos of former US president Barack Obama in marketing materials and lofty claims that has cast doubts over the credibility of the Lohs and Ms Shen.
The silence from Axington's sponsor Novus Corporate Finance has also not gone unnoticed by market watchers.
Amid the hullabaloo, Axington's stock has been suspended while its board has whittled down to merely two independent directors following an en masse board resignation on Sept 1 which included its chairman Ms Shen, and executive director Marjory Loh, the sister of Mr Terence Loh.
The company had then cited "strategic changes that are expected to be made in the business direction" for Ms Shen's resignation although the lack of clarity up to now continues to confound market watchers.
In a response to a query on the matter by the Singapore Exchange, Axington replied two weeks ago that its board understood from the controlling shareholders that they were "exploring strategic possibilities".
BT understands that one such possibility is the unwinding of their holding in the firm.
Last week, The Straits Times reported that Ernst & Young, a leading accounting firm, lodged a police report regarding allegedly unauthorised signatures of the firm on financial statements of Novena Global Healthcare Group.
Novena Global Healthcare Group, which is controlled and founded by the Lohs, was incorporated in the Cayman Islands and is a holding company for several businesses ranging from aesthetic medical, beauty and wellness services to sale of cosmetic products and operation of medical clinics.
It was also reported that the Singapore police had received the complaint and were looking into the matter.
In a statement, EY said it was "never the auditors" of Novena Global Healthcare Group but were the auditors of Novena Global Healthcare Pte Ltd - a Singapore incorporated company and subsidiary of Novena Global Healthcare Group - for the financial year ended December 2017.
"We were not appointed as auditors of and did not sign off on the financial statements of Novena Global Healthcare Pte Ltd for any subsequent years," it added.
Following news of the police report and the bad press, BT understands that "very concerned" and "annoyed" investors and shareholders of the Cayman Islands firm, Novena Global Healthcare Group, have engaged legal counsel as they seek ways to protect their rights.
"The company actually has viable businesses. The minority shareholders don't want the firm to come crashing down by all that's happening with Bellagraph which has nothing to do with them. They want to ensure that the company is sustainable and operational," said a source.
