Sincap jumps 6.3% on liability disclaimer, Orion Energy expansion
The firm says it no longer has responsibility for Shandong Luneng's operations
Singapore
SHARES of commodity trader Sincap Group rose 6.3 per cent on Friday after the company took steps to address potential liabilities from a recently disposed subsidiary.
The counter finished at 1.7 Singapore cents, up 0.1 Singapore cent, with 35.3 million shares worth S$628,200 changing hands, making it one of the top five stocks by volume.
Advanceleap Corp, which recently bought Sincap subsidiary Beijing Raffles Investment Advisory, has given an undertaking not to hold Sincap to any potential issues or liabilities that might arise from Beijing Raffles' Shandong Luneng business.
The management and employees union of Shandong Luneng had previously claimed that Shandong Luneng was required to complete a mine refilling project as soon as possible, and would require 31 million yuan (S$6.3 million) to do so. Those claims were allegedly based on directives of the National and Provincial City Safety Supervisory Department.
But Sincap said that its board had concluded, after investigations, that the company faced no liability with respect to those claims.
Based on legal advice it had received, Sincap said that it was not aware of any Chinese laws and regulations under which Shandong Luneng had any current statutory responsibilities to complete the mine refilling project as stated in the letter, nor did it receive any orders from the Chinese authorities requiring it to pay off any outstanding social security insurance to Shandong Luneng employees.
"The Shandong Luneng employees have been duly paid such social security insurances according to the statutory requirements under PRC laws," Sincap said in a statement on Friday, adding that the company "is and will not be responsible for any claims against Shandong Luneng".
Sincap announced separately that the S$10 million in proceeds from its sale of Beijing Raffles to Advanceleap have been fully used for the business expansion plans of its subsidiary Orion Energy Resources, which Sincap acquired for S$7.2 million in 2015.
Singapore-incorporated Orion Energy Resources sources for coal from major traders and mine owners in Indonesia, and ships the commodity weekly to power plants owned by a state-owned enterprise in China.
The funds, Sincap said, were loaned out by Sincap to Orion to expand the latter's business through the securing of coal supplies for subsequent sale, as part of Orion's ongoing trading business.
Sincap also disclosed that it has hired a law firm to look into a payment owed to subsidiary SCL Murray Pty Ltd, after Sincap issued a letter of demand to Damon Ferguson, Chad Ferguson and Anthony Hatt for an outstanding loan amount of A$4.23 million (S$4.37 million). SCL Murray Pty Ltd is an Australia-based owner-operator of real estate.
