Transcorp assessing going-concern ability after Fuji Xerox's claim, lapse of share placement

CATALIST-LISTED Transcorp Holdings, which sells and rents cars, on Sunday night announced that its board is assessing the group's ability to operate as a going concern, in light of a S$48,736 claim it received from Fuji Xerox Singapore as well as the lapse of its proposed share placement. (see amendment note)

Transcorp had on July 20 proposed to raise S$550,000 through a placement of 110 million new shares at the issue price of 0.5 Singapore cent apiece to two private investors. The completion of each placement agreement was conditional upon the fulfilment or waiver of certain conditions precedent.

On Sunday, the company said the long-stop date for the agreements had lapsed, as the conditions precedent were not fulfilled or waived within 60 days. Transcorp and the placees will not proceed with the placement.

Transcorp said its board continues to seek out and engage potential investors as part of its efforts to improve the company's cash flow and financial resources through third-party funding.

The lapse of the placement agreements is not expected to have any material impact on Transcorp's consolidated net tangible assets (NTA) or earnings per share (EPS) for fiscal 2019 ending Oct 31.

Separately, the company also received a writ of summons from Fuji Xerox Singapore for a claim of S$48,736 in the State Courts of Singapore on Sept 9, in relation to rental arrangements for two photocopiers.

The company said it is seeking legal advice on this matter, and is also investigating the circumstances surrounding the photocopiers' rental arrangements.

The claim is not expected to have any material impact on the company's consolidated NTA or EPS for the fiscal year ending Oct 31, notwithstanding the lapse of the placement agreements, based on the group's latest audited financial statements for fiscal 2018 and the first half ended April 30, 2019.

Transcorp's board is assessing the group's going concern basis premised on the successful raising of capital through corporate actions, as well as the follow-on business plans that will generate sufficient cash flows from the group's operating activities and financing plans, to allow the group to ramp up its operations and meet its obligations for the foreseeable future.

The company said it will make announcements as and when there are material developments on potential investments and the Fuji Xerox claim. In the meantime, shareholders are advised to exercise caution when dealing with the company's securities.

Transcorp requested a trading halt on Sept 19 before trading hours. Its shares last changed hands on Sept 10 at 0.4 Singapore cent.

Transcorp had announced previously that it would have a going-concern issue if it did not manage to raise funds by the end of June. On July 9, it said it was in talks with various groups of investors.

Transcorp also noted on July 9 that it had spoken to professional services firms on its winding up process in the worst case scenario, in the event that Transcorp is not able to successfully raise funds.

The group needed to raise some S$1 million to pay its debts and liabilities by the end of June. It was also struggling to recover S$8.6 million in deposits paid to two entities owned by people with links to Transcorp.

Amendment note: An earlier version of this article misstated the amount of the Fuji Xerox claim as S$48.7 million when it is in fact S$48,736. The article has been amended to reflect this. We apologise for the error.