SINGAPORE (July 19): Less than a year after it was chided by Singapore Exchange Regulation (SGX RegCo) for failing to conduct proper due diligence for its controversial purchase of a haircare business, Datapulse Technology has found itself back in the crosshairs of the SGX.
SGX on Friday issued a notice of compliance to Datapulse over its recent investments in two hotels, as well as the awarding of hotel management agreements to companies linked to chairman Aw Cheok Huat.
SGX ordered Datapulse to disclose its basis for determining that its investments in minority stakes in the hotels were in the interest of its minority shareholders.
The bourse also requires Datapulse to disclose its justifications for acquiring the hotels with vacant possession when decisions on the hotel management company appointment have not been executed, or are made solely by its joint venture partner.
The company’s audit committee has also been ordered to review the terms of any hospitality-related agreement to be entered into with ICP Group, whose chairman and controlling shareholder is Datapulse’s Aw.
SGX says the audit committee has to be satisfied that any such agreement is on normal commercial terms and is not prejudicial to the interests of Datapulse and its minority shareholders.
Datapulse is also required to provide an update whenever there is any change in the interests of any of its directors or controlling shareholders in any transaction announced by the company.
SGX says failure to comply with these requirements shall be deemed to be a contravention of the SGX Listing Rules.
Datapulse had earlier entered into agreements to acquire a 5% stake in Bay Hotel Singapore and a 15% stake in Holiday Inn Express Euljiro in Seoul.
On July 17, Datapulse had confirmed in its response to SGX queries that it had appointed Travelodge Hotels Asia (TLA) as the hotel management company to manage Holiday Inn Express Eulijiro.
TLA is a wholly-owned subsidiary of ICP, which also provides hotel management services to certain hotels owned by the parent company of Bizcentre Capital – Datapulse’s joint venture partner for the Seoul hotel acquisition.
In response to SGX’s queries, Datapulse said the agreement with the joint venture partner for the joint purchase of the hotel was separately negotiated from the hotel management agreement.
It added that Aw was not involved in negotiations between TLA and Bizcentre Capital.
The notice of compliance comes as Datapulse diversifies into the hospitality industry, after shutting down its compact discs and blu-rays discs manufacturing business.
Its other recent diversification efforts include its controversial purchase of haircare company Wayco Manufacturing, which earned it a rebuke from SGX RegCo.
Less than a year after the $3.4 million acquisition, Datapulse then announced it was selling the haircare products manufacturer back to its original owner, Way Company, for $3.2 million – some 7.5% lower than its purchase price.
Datapulse was also embroiled in a legal tussle with three former executive directors, who demanded the company pay them an aggregate sum of $751,118.
The former directors claimed the amount was due to them as part of a profit sharing arrangement under their service agreements with the company.
Shares in Datapulse closed flat at 24.5 cents on Friday.