Innopac to engage valuer on businesses it plans to dispose after further queries by SGX

PC Lee

SINGAPORE (Nov 16): Innopac Holdings, one of the companies linked to John Soh Chee Wen, the alleged mastermind behind the 2015 penny stock crash, has agreed to engage a valuer to assess a clutch of businesses to be sold to CEO Wong Chin Yong at a steep discount.

This comes after the Singapore Exchange recently raised more queries over the interested person transaction (IPT). It was only on Nov 5 that Innopac had responded to earlier SGX queries that it would not engage a valuer to assess the IPT due to cost reasons.

On Oct 9, Innopac announced it had found new investors willing to subscribe 8.4 billion new shares at 0.1 cent each to raise gross proceeds of $8.4 million. In conjunction with the new investments, CEO Wong will also buy over a clutch of subsidiaries now owned by the listed company for $100,000.

The subsidiaries for disposal are Heritage Investment Corporation (HIC), Wang Da Investment (WDIL), Golden Eagle Mining (GEM), Extera (EPL) and Malaysian Microalgae Enterprise (MME).

WDIL and Heritage have a net tangible liability (NTL) of $11.45 million while the three other remaining subsidiaries have a total net tangible asset (NTA) value of $9.16 million.

When asked why Innopac's board had decided that disposing the entities to the CEO by offsetting the NTL of $11.45 mil against the other companies with positive NTA was in the best interest of the company and shareholders, the board said WDIL and Heritage were subject to an ongoing claim for a total of about $15 million by Saxo Bank A/S and it was likely the plan would meet with objections from the latter.

“In view of the foregoing, and the lack of time and potential purchasers for the Entities comprised in the Proposed Disposal, the Board concluded that the best option was to effect the Proposed Disposal, including the disposal of the Wang Da Investments Limited and Heritage Investment Corporation, to the CEO,” says Innopac.

In its answers to other SGX queries, Innopac also revealed that its $6 million investment in a microalgae joint venture had been fully impaired in the financial period ended June 30.

Innopac says it started discussions with JV partner Primeforth Renewable Energy on the recovery of the investments and had even issued a letter of demand.

However as Primeforth was ultimately held by an offshore company and its assets were based at an unknown location, any enforcement action was likely to be both difficult and costly with no certainty as to whether any meaningful recovery could be made, said Innopac.

“Given the uncertainty of the recoverable amount and timing of the recovery, the Company is of the view that expending the additional costs and time spent to pursue this claim may not be justified and instead would hamper the progress and focus of the Company’s fundraising exercise,” adds Innopac.

On Thursday, Innopac reported 1Q19 net loss widened to $741,000, from $436,000 a year ago. Revenue fell 63% to $10,000.

This is not the first time Innopac has made the news for the wrong reasons. Back in April 2014, the company announced that Wong was assisting in a Commercial Affairs Department probe. Soh, who has pleaded not guilty to the charges of stock manipulation and is now remanded in custody awaiting trial, was also a former MD at the company.

Suspended since June 7, Innopac on Oct 26 said its application to resume trading of its shares has been rejected the Singapore Exchange.