Sunvic Chemical directed to put equity sale proceeds in escrow

SINGAPORE Exchange Regulation (SGX RegCo) has directed Sunvic Chemical to place the 384.6 million yuan (S$77.13 million) proceeds from a proposed sale of equity in an escrow account to be operated jointly by the company's independent directors.  The amounts are not to be withdrawn till completion of investigations into two unauthorised corporate guarantees.

SGX RegCo wrote to the lead independent director of Sunvic Chemical on Wednesday, expressing "serious concerns over the questionable circumstances surrounding the unauthorised (and) undisclosed significant corporate guarantees extended to purported third parties".

The regulator is asking the mainboard-listed manufacturer of intermediate chemical products, pending the outcome of the investigations into the loans and circumstances of the purported unauthorised guarantees, to place in an escrow account the incoming proceeds of 384.6 million yuan from the proposed divestment of a 45 per cent equity interest in a joint venture.

According to the directive, the escrow account could only be operated jointly by Sunvic Chemical's independent directors that are resident in Singapore. In addition, the amount cannot be withdrawn till investigations into the circumstances of two unauthorised corporate guarantees that exposed the company to 226.67 million yuan have concluded and with the approval from the SGX.

The company was reminded that failure to comply with these requirements shall amount to a contravention of the listing rules.

Sunvic Chemical had in January belatedly announced that two of its wholly-owned subsidiaries had received letters of demand arising from the corporate guarantees they had extended to purportedly unrelated parties in China.

Trading in Sunvic Chemical shares has been suspended since Jan 14 upon the company's request. The counter was flat at 2.2 Singapore cents when it last traded on Jan 4.