SunMoon needs to shed light on lopsided deal

THE board of SunMoon Food Co should not allow a proposed debt-discharge deal to proceed as is - unless it also removes SunMoon chairman Gary Loh from the decision-making process and better explains the merits and circumstances of the transaction to minority shareholders.

The deal, announced on Feb 10, is problematic on several levels.

As an investment, the proposal requires SunMoon to pay more for less, and with less upside. As a way to manage debt, the deal is extremely lenient towards SunMoon's debtors. And from a governance perspective, new information from SunMoon reveals a potential conflict of interest for Mr Loh.

At the heart of the matter is a Feb 10 proposal for SunMoon to buy a 12 per cent stake in Harvest Season from one Tony Zhang, who will retain …