SGX RegCo issues notice of compliance to Darco for detailed report on Gaoyi project

SINGAPORE Exchange regulators (SGX RegCo) on Friday ordered Darco Water Technologies to disclose a detailed report on the status of its proposed investment in the Gaoyi domestic waste water treatment project with input from its legal advisers by Sept 17.

The company is to disclose details of the current ownership structure in the Gaoyi project, including those of former non-executive deputy chairman Wang Zhi, special purpose vehicle for the project Huize, He Bei Kai Yuan Cheng He Water Engineering Co (HKC) and Wo De Si Yuan Group Co (WDSY), as well as the relationships between these parties.

In 2018, the company had announced that it had signed a non-binding letter of intent with Mr Wang in respect of a proposed investment in the Gaoyi project, which holds a 30-year concession on a waste water treatment plant.

It was disclosed then that Mr Wang will transfer 100 per cent of his equity interest in the Gaoyi project to the group, which he held through HKC. Mr Wang was the controlling shareholder of HKC.

The company said that HKC had signed a cooperation agreement with WDSY, the Chinese company that had successfully won the project in an open tender from the Gaoyi County Government in December 2016.

SGX RegCo is ordering the company to disclose details of the water treatment asset that is supposed to be transferred to it, as well as the facts and circumstances surrounding the extension of deadline for the transfer of the Gaoyi project, including the board's assessment and bases for the extension of the deadline.

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In addition, SGX RegCo is requiring Darco to disclose details of legal recourse available to the company under the placement agreement and supplemental agree, including the recovery of the deposit of 6 million yuan and potential compensation sum of S$2 million from Mr Wang if the deed of undertaking is not fulfilled.

SGX RegCo is also seeking key findings and recommendations by Binnies, which was appointed as Darco's independent third-party technical and economic due diligence consultant on June 3.

Darco is expected to provide details of key information, documents and data points requested for the due diligence that remain outstanding from Mr Wang and the deadline to provide such information.

In addition, SGX RegCo is seeking the board's assessment of whether it will be proceeding with the proposed investment in the Gaoyi project, and any concerns that were highlighted to the board to reject the project and the key findings and recommendations by Binnies.

It is also seeking the board's assessment of the timeline and information required for a definitive conclusion to be made on the Gaoyi Project in order for the company to secure the legal recourse.

Shares of Darco closed flat at 18.6 Singapore cents on Friday.