Singapore Corporate News - 3 Apr 2008

Anthony Soh's offer for Jade Tech hits a snag

JADE Technologies group president Anthony Soh's takeover bid for the company has run into a snag after Dr Soh said yesterday in a letter to Jade's board he could not confirm he had sufficient resources to go through with the offer. He also said that OCBC has ceased to be the financial adviser for the offer.

Dr Soh explained that his ownership of a block of shares, representing about 30.5 per cent of Jade, has become unclear.

On Tuesday he revealed that to secure financing he had pledged that block of shares last October to Australian stockbroker Opes Prime. Opes went into receivership last Thursday after directors found irregularities in the firm's accounts. Under the terms of the agreement with Opes, ownership of those shares may now have passed to Opes and on to its creditors.

In yesterday's letter, Dr Soh said that assuming his shareholdings were stated at just 16.06 per cent of the company, rather than about 46 per cent as previously thought, then he could 'not confirm as at 2 April 2008 that sufficient resources are available ... to satisfy full acceptances of the offer'.

Last month, Dr Soh through his investment vehicle Asia Pacific Links (APL) had offered 22.5 cents a share to acquire all outstanding shares. The offer document stated then that he controlled about 46 per cent of the company's shares.

Jade had called a trading halt yesterday for the release of an earlier letter dated Apr 1 from Dr Soh stating that he had entered into a Global Master Securities Lending Agreement (SLA) with Opes dated Oct 12, 2007, pledging 295,450,000 shares in Jade, or about 30.47 per cent of its total share capital, in order to secure financing from Opes.

Although news of Opes's collapse broke last week, in his letter dated Apr 1 to Jade's board of directors, Dr Soh said he 'did not realise until 1 April 2008 that the SLA had operated as a transfer of title and was under the impression all along that the said shares were pledged'.

He added that he was 'under the impression', due to 'representations made by the CEO of Opes, Laurie Emini, that the ownership of the said shares remained with the offeror (APL) at all times and that at any time the said shares could be redeemed by the offeror'.

He added that a circular sent out on Monday by receivers and managers appointed by a creditor of Opes told clients that 'where securities are 'lent' to Opes, absolute title to the securities passes from the lender to Opes'.

Dr Soh said 'a review of the terms of the SLA is consistent with the position as set out' in that circular, meaning that ownership may have passed to Opes.

An analyst said that if this is the case the offer may not become unconditional as Dr Soh may not be able to secure more than 50 per cent of the company. 'In this case, they may have to return the acceptances,' he said. Dr Soh said yesterday that as at Apr 1, he had received acceptances representing 3.06 per cent of Jade's share capital.

Traded volume in Jade has spiked recently. Last Wednesday, about 1.46 million shares changed hands. This rose to 15.9 million shares on Friday and hit 196 million on Tuesday before trading was halted. Its share price closed at 22 cents.

According to Australian media reports, clients of Opes have become unsecured creditors because the securities lending agreements they signed transfered away legal title to their shares.

Opes lent clients money on the securities, mostly small cap stocks, financing its loans by borrowing from banks at a lower cost. The firm reportedly owed A$650 million to ANZ and A$350 million to investment bank Merrill Lynch.

Special audit for Advance Modules

THE Singapore Exchange (SGX) has directed Advance Modules Group to appoint special auditors immediately to investigate the affairs of the company, including a US$11.89 million acquisition that has been questioned by its auditors.

Advance Modules, which disclosed this yesterday, said it is in the process of appointing Messrs KPMG to undertake the special audit. The special auditors will report to both the company's audit committee and SGX.

Trading in shares of Advance Modules, a manufacturer of memory modules and flash memory products, was halted yesterday prior to the release of the news in the evening.

The company earlier disclosed concerns from its auditors, Horwath First Trust, in its 2007 full-year financial statement on March 31.

Advance Modules had made deposit payments and acquired new machinery and equipment amounting to around US$11.89 million, but Horwath did not 'consider evidence and information made available to them sufficient for them to form an opinion on the validity of the acquisition'.

Horwath recommended that the company's audit committee commission a special audit to look into the validity of the acquisition, and the board, following the audit committee's advice, has agreed to appoint an independent auditor to do so.

Shares of Advance Module resume trading today.

Australia cancels Optus Internet deal

The Australian government has cancelled a A$958 million (S$1.2 billion) funding agreement with Singapore Telecommunications Ltd and Futuris Corp for an Internet network because the project did not provide the required coverage.

Optus Networks Pty Ltd, a wholly owned subsidiary of Singapore Telecom, and Futuris, its venture partner in OPEL Networks Pty Ltd, which was awarded the project, were notified on Tuesday of the cancellation because conditions haven't been met, SingTel and Futuris said in separate statements.

The funding was rescinded because the project would cover only 72 per cent of the required region, instead of the 90 per cent outlined in the contract, the Department of Broadband Communications and Digital Economy said in a statement. The companies had announced on Sept 10 a funding agreement with the government allowing them to build a broadband network to under-served regions of rural Australia.

'We believe the Department's process was flawed,' Optus chief executive Paul O'Sullivan said in a statement. 'We are quite happy to have a respected independent expert audit OPEL's coverage.' The companies said they have satisfied the terms of the contract with the network capable of serving 889,322 customers within two years at a price 30 per cent lower than existing levels.

'The OPEL access network, which was to be wholesaled to other telcos and Internet service providers, will now not be built,' the Optus statement said.

Optus has already spent A$16 million, which will be written off, with the net impact on SingTel's earnings for the year ended March 31 to be 'negligible', Chia Boon Chong, Singapore-based spokesman for SingTel, said by phone. Futuris expects to make a A$15 million provision for the cancelled contract, it said in a statement.

'This is a commonsense decision about a billion-dollar waste of taxpayers' dollars that would have delivered the wrong technology to the wrong places,' Geoff Booth, group managing director of Telstra Country Wide, said at a briefing in Sydney yesterday. Telstra Corp was the competitor for the proposed new network.

KSH wins $53m KepLand deal

CONSTRUCTION and property group KSH Holdings has secured a contract worth about $53 million from a Keppel Land subsidiary.

The contract from Keppel Land Realty is for the construction of Madison Residences, an 18-storey luxury condominium development at Bukit Timah Road.

Construction work is scheduled to begin in June and expected to be completed within 130 weeks.
Choo Chee Onn, executive chairman and managing director of KSH Holdings, said: 'Including this contract, our total contract value secured within the first three months of this year has exceeded $277 million, more than half of the $510 million we had achieved for 2007.'

Existing orders now stand at more than $658 million, with the unfulfilled contract value for all existing contracts on hand expected to cover up till the third quarter of the financial year ending March 31, 2011.

Mr Choo added that KSH would continue to expand its clientele base to include more blue-chip property developers.

Besides the Madison Residences deal, the group's current residential contracts include three at Sentosa Cove. These include the $121 million The Coast contract and the $65 million Turquoise contract, both from Ho Bee Group.

The third, Seascape At Sentosa Cove, was awarded by Seaview (Sentosa), a co-owned company of Ho Bee and IOI Group.

Other residential projects on hand include a $53 million high-end condominium residential project at Orange Grove Road, also from Ho Bee, and a $32 million contract for the construction of landed housing at Old Holland Road from developer Brisbane Development.

Apex-Pal outlets to hit 100 by year-end

UNFAZED by rising food costs, Apex-Pal International said it is still expanding its global footprint of Japanese food outlets, with a target of 100 outlets by the end of this year, up from the existing 87.

Shortly after opening its first Sakae Sushi outlet in New York last December where the group invested some $3 million, Apex-Pal is ready to open a second one in the US this May.

'Last year, we have been growing at two outlets per month. Going forward, we want to sustain that,' Apex-Pal chairman and CEO Douglas Foo told reporters yesterday.

A typical pay-off period for a new Sakae Sushi outlet is 18 to 24 months, but the first US outlet opened last year is likely to take longer, considering the relatively dearer lease at the iconic Chrysler Building, he added.

Besides the US, the group is eyeing new markets in the Middle East, Vietnam, Central Europe and Mongolia to open new Sakae Sushi outlets. It is talking to potential joint- venture partners in the Middle East and Vietnam.

In Mongolia, where Apex-Pal has a memorandum of understanding with a local partner for a joint venture, Mr Foo said the group is still working out the details on manpower training and logistics, which will take some time to materialise.

'In three to five years time, we should see more than half of our sales coming from overseas,' Mr Foo said. Singapore currently contributes to 86 per cent of group sales.

At least three new brands will also be launched this year, including the recent launch of Sakae Izakaya for affordable Japanese small bites and drinks at Sentosa's Siloso Beach last month.

Such unabated expansion pace is made possible despite rising food costs, thanks to cost-control measures and the use of niche manpower supply such as matured workers to cope with labour shortage.

Mr Foo said he was recently in Qingdao, China, to scour for alternative sources of food supplies and is exploring buying in bulk directly from farms rather than distributors to eliminate the costs incurred through the intermediaries.

Raw materials account for 30 per cent of the group's operating costs and Apex-Pal has seen a one percentage point increase in raw material prices led by higher food costs last year, said Phyllis Phua, vice-president of group finance and administration.

Despite the current economic slowdown, Mr Foo noted that the bulk of the target clientele, which is the casual dining segment, provides a good buffer.

Hence, he remains bullish that the group will maintain average annual growth in earnings and revenue of above 9 per cent and 20 per cent respectively over the next five years and to keep gross profit margins above 70 per cent.

Keppel Land staff take course in marina mgt

IN A concrete sign of commitment to providing quality marina management, Keppel Land's Marina at Keppel Bay has put all its staff through the widely recognised introduction to marina management course by Marina Industries Association of Australia. And standing fully behind the team is Keppel Land's Singapore residential chief executive officer Augustine Tan, who took part in the two-day training course alongside his staff.

About 30 of the marina's employees underwent the course. As a result, Marina at Keppel Bay is the only marina in South-east Asia to be managed by a fully-trained and qualified marina management team. Everyone from customer service officers and administrative staff to the property management team and marina service crew, right up to Mr Tan himself, got involved in both the theoretical side of operating a marina as well as at a very practical level.

The course was specially customised for the marina's staff by Andrew Chapman, who is a certified marina manager and director of the MIAA and also chief executive officer of the waterfront residential marina estate The Marina Hindmarsh Island in South Australia with over 20 years of experience in the marina industry. Topics covered included marina terminology, day-to-day operations and work safety aspects.

'Marina at Keppel Bay has recognised that the professional development of their staff is very important to improving the level of service that is offered to the boating community in Singapore and the surrounding areas and with the quality of marina construction there is no doubt that this is a cutting edge, premier facility within the region which will attract superyachts and megayachts and will become an iconic destination in Asia,' said Mr Chapman. 'We would also hope to work very closely with Keppel on any future marina developments in the region they might have down the track,' he added.

'This marina is pioneering training at this level in Singapore. They will be able to offer top-end service to match the facilities at the marina which will stand out as an advantage compared to what other marinas can offer.'

NOL appoints new heads for booming Middle East

NEPTUNE Orient Lines (NOL) has announced key appointments to take advantage of growth in the booming Middle East.

Gene Seroka takes over from Ong Tuen Suan as vice-president for the Middle East. Based in Dubai, he will oversee the APL, APL Terminals and APL Logistics businesses across the region. He has held senior positions with APL and APL Logistics in North America and across Asia since 1988.

Mr Ong has moved back to Singapore to take a senior corporate finance position after five years as vice-president for the Middle East.

Komol Roongruangyot has been appointed managing director for the United Arab Emirates and head of Middle East logistics. He was previously director of APL Logistics in Thailand. He will be responsible for container shipping, terminals and logistics activities and will focus on development of logistics activity across the Middle East.

Ajit Jangle is replacing Ted Muttiah as managing director for Saudi Arabia and Bahrain. Mr Muttiah was appointed MD for Egypt in February. Mr Jangle will oversee container shipping and logistics, and will be responsible for building the terminals business in these markets. He was previously based in Dubai as logistics director for the Middle East.

Medi-Flex narrows interim loss

MEDI-FLEX has narrowed its loss to 1.96 million yuan (S$384,982) for the six months ended February, from 11.3 million yuan a year ago. Revenue fell to 29.2 million yuan from 39.6 million yuan. The company said that the improvement came about after it implemented quality improvement and cost-cutting measures, including adjusting its sales mix.

Pan Asian Water bags deals worth $14.6m

PAN Asian Water Solutions has secured new contracts worth $14.6 million, bringing the value of projects won so far for FY2008 to $47.6 million. The latest contracts include a $11.6 million project in Brunei and a $1.7 million contract for the Public Utilities Board in Singapore.