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Sunvic CEO quits, citing 'poor health', following role in guarantees for loans

MAINBOARD-LISTED Sunvic Chemical's executive director and CEO Sun Xiao has resigned, citing poor health, after the company's audit committee previously said it will consider disciplinary action against him for his involvement in corporate guarantees provided for loans amounting to some 222.5 million yuan (S$44.2 million).

The exchange filing on Thursday cited "deteriorated health issue due to work stress" for Mr Sun's departure. The 33-year-old will relinquish his positions on Feb 8 next year, after being made executive director in 2012 and CEO in 2013. 

His mother, Hu Yanping, is a substantial shareholder of Sunvic. 

Before this, Sunvic's audit committee had said on Nov 7 it will consider appropriate disciplinary action to recommend to the board to take against Mr Sun, after an external auditor's probe into the corporate guarantees provided for the loans showed the level of Mr Sun's involvement. 

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The investigation was requested by the company's independent directors after Sunvic Chemical's subsidiaries, Yixing Yinyan Import & Export Co (Yixing Yinyan) and Jiangsu Jurong Chemical Co (Jiangsu Jurong), received letters of demand in relation to two corporate guarantees. The corporate guarantees were extended to the borrowers – Jiangsu Donglai Real Estate Development Co (Jiangsu Donglai) and Jiangsu Dahe Lvjian Chemical Co (Jiangsu Dahe). Yixing Yinyan had extended a corporate guarantee to Jiangsu Donglai, whose creditor is Yixing City Futao Rural Micro Credit Co, while Jiangsu Jurong extended a corporate guarantee to Jiangsu Dahe, whose creditor is Bank of China. According to the special auditor report, Mr Sun and Sunvic's vice-president of banking and finance, Liu Wen, did not monitor the repayment of the Yixing City Futao loan by following up with Jiangsu Donglai or Yixing Futao Credit.

Both of them also refused to disclose the name or position of the Yixing City government official who had supposedly contacted them for the loan. 

Trading in Sunvic Chemical shares has been suspended since Jan 14 upon the company’s request. The counter last traded at 2.2 Singapore cents.