ENGINEERING company Tee International and its former chief executive officer and managing director Phua Boon Kin have been reprimanded by the Listings Disciplinary Committee (LDC) of the Singapore Exchange (SGX).

 

In a statement on Thursday (Jan 18), SGX said that the reprimand was for failing to disclose claims served to a subsidiary, and for having unsatisfactory systems of internal controls and risk management.

 

The LDC brought six charges in total against the mainboard-listed company. They included:

 

Three charges were for failing to disclose claims served to its subsidiaries. These lapses contravened Mainboard Rule 703 (1)(a), with the disclosure of the claims necessary to avoid the establishment of a false market.

1. Claims served by &ldquo various creditors&rdquo to Tee International subsidiaries Trans Equatorial and PBT Engineering on or about Oct 19, 2020, for an aggregated amount of S$$4,281,971.68. This represented 22.3 per cent of the company&rsquo s net asset value (NAV).

2. A claim from Fuji SMBE Technology served on Trans Equatorial for S$2,694,000 on or about Dec 2, 2020, representing around 13.9 per cent of the company&rsquo s NAV.

3. Two claims from Power-Link Engineering served on Trans Equatorial for a total of S$5,115,127.51 on or about Dec 16, 2020, representing 26.6 per cent of the company&rsquo s NAV.

SGX brought two charges &ndash in accordance with Mainboard Rule 705(2) &ndash for failing to disclose or provide commentary on the claims for the company&rsquo s financial statements in the half year ended Nov 30, 2020, and for the third quarter ended Feb 28, 2021.

SGX also brought one charge of failing to have in place adequate and effective systems of internal controls and risk management systems to monitor the claims received, and to escalate matters to the board for timely disclosure.

According to LDC findings, Phua had failed to bring these claims to the attention of the board in a timely manner, with the summary of the above claims revealed to the board only on June 3, 2021.

 

SGX said that having regard to Mainboard Rule 1402 (6), Phua was himself also charged for causing the company to be in breach of the above-mentioned six charges.

 

He had been an executive director of the company since 2008 and was CEO and managing director since September 2019, and &ldquo at all material times&rdquo was also executive director of Trans Equatorial and PBT Engineering.

 

The LDC has required Phua to provide a signed, written undertaking to not seek any directorship on the board of directors, or role as a key executive officer of SGX-listed issuers for two years starting from Dec 11, 2023.

 

Tee International&rsquo s shares have been suspended from trading since June 2021.

 

On Jan 12, 2024, the company received a notification of delisting from SGX. Its application requesting a further extension of time until Mar 31 to submit its revised trading resumption proposal was rejected by SGX.

 

Tee International had formerly been reprimanded by SGX in 2021 for unauthorised remittances.

MAINBOARD-LISTED Tee International has received a notification of delisting from the Singapore Exchange (SGX), the company said in a bourse filing on Friday (Jan 12).

 

Its application requesting for a further extension of time until Mar 31 to submit its revised trading resumption proposal was also rejected by SGX.

 

This is on the basis that the company has been unable to provide &ldquo substantive details of its proposed acquisition and substantiation&rdquo to demonstrate that its plans, including its proposed acquisition, would enable it to operate as a going concern and have trading resume, according to SGX.

 

In the delisting notice served to Tee international by the Singapore Exchange Regulation, SGX noted that trading in the company&rsquo s shares has been suspended since Jun 18, 2021.

 

It pointed out that the company had not submitted a definitive resumption proposal that will allow trading of its securities to resume within 12 months of the date of its suspension neither had it done so by the extended timeline of Apr 30, 2023.

 

Due to this, SGX will proceed to delist Tee International. It added that trading of the company&rsquo s shares will remain suspended until the company&rsquo s delisting from the exchange on Feb 20, 2024.

 

Tee International said that it had made the extension application on Dec 27, 2023, to allow the company and its professional advisers &ldquo sufficient time&rdquo to work towards the resubmission of a trading-resumption proposal.

 

The company has also been working on fulfilling conditions precedent to its proposed acquisition, since the term sheet was executed on Dec 14, 2023, it said. This includes &ndash but is not limited to &ndash conducting financial and legal due diligence on the target firm.

 

It stressed that the proposed acquisition was &ldquo critical&rdquo to the resumption proposal, as the acquisition of the target company would significantly contribute to the group&rsquo s financial projections.

 

This would allow it to present its business as &ldquo a robust and viable going concern&rdquo in the resumption proposal. The company added that this was in conjunction with a subscription agreement with Meta5 to issue new shares worth S$7.5 million in the company the grant of S$7.5 million in principal amount of unlisted and non-transferable share options to Meta5 the debt restructuring exercise through a scheme of arrangement as well as the renounceable non-underwritten rights issue to raise S$3.5 million in proceeds.

 

The company&rsquo s board is currently reviewing the delisting notification and intends to submit an appeal to SGX.

TEE International : M1Z 0%&rsquo s independent auditor, Foo Kon Tan LLP, has issued a disclaimer of opinion relating to the group&rsquo s financial statements for the financial year ended Sep 30, 2023.

 

In a report posted by Tee International to the Singapore Exchange late on Tuesday (Jan 9), the auditor said firstly it was unable to determine whether adjustments are required to the group&rsquo s FY2023 financial statements.

 

This stems from uncertainty over the group&rsquo s opening balances as at Oct 1, 2022, which &ldquo form the basis of determining the financial performance, changes in equity and cash flows of the group&rdquo for FY2023, it said.

 

Foo Kon Tan had previously expressed a disclaimer of opinion in its independent auditor&rsquo s report dated Jan 13, 2023 in respect of the group&rsquo s FY2022 financial statements.

 

It said that matters contributing to the modification of its audit report for FY2022 include &ldquo limitation of scope on opening balances, insufficient information to complete the audit of the consolidated financial statements of the group, completeness of liabilities, and appropriateness of the going concern assumption&rdquo .

 

The auditor said it is still unable to obtain sufficient appropriate information to determine whether any adjustments might be necessary to the amounts and disclosures shown in the group&rsquo s FY2022 financial statements. This includes the group&rsquo s closing balances as at Sep 30, 2022 and opening balances as at Oct 1, 2022.

 

It added that its opinion on the FY2023 financial statements is also modified &ldquo because of the possible effect of the comparability of the FY2023 financial statements and the FY2022 financial statements&rdquo .

 

Secondly, Foo Kon Tan cited insufficient information to complete the audit of the group&rsquo s consolidated financial statements.

 

For one, it pointed out that the profit or loss for the period Oct 1, 2022 to Feb 19, 2023 of a significant subsidiary, PBT Engineering, was not audited as the subsidiary was disposed of on Feb 20, 2023.

 

Foo Kon Tan added that the group&rsquo s management also did not provide sufficient information for it to complete the audit on certain financial statements&rsquo captions of PBT for FY2022. This prevented it from determining if adjustments are needed to PBT&rsquo s financial information, which has already been incorporated into the group&rsquo s FY2022 and FY2023 financial statements.

 

Thirdly, the auditor said it was unable to obtain sufficient appropriate information on the completeness of claims against Tee International. This was because the company had provided corporate guarantees in respect of contracts of former subsidiaries in the engineering and construction segment, and a number of these contracts are still ongoing.

 

The company&rsquo s scheme of arrangement with unsecured creditors has also not been completed, it added.

 

Lastly, the auditor cited the existence of material uncertainties, which &ldquo may cast significant doubt&rdquo about the group&rsquo s and company&rsquo s ability to continue as going concerns.

 

Foo Kon Tan flagged factors such as the group&rsquo s FY2023 net loss of S$257,000 from continuing operations, the amount of its total and current liabilities and assets, as well as the company&rsquo s current scheme of arrangement.

 

The auditor noted that the group&rsquo s and the company&rsquo s ability to continue as going concerns &ldquo is dependent mainly on the successful implementation of the restructuring plan and successful outcome of the scheme of arrangement, the ability to secure financing as and when required, the profitability of future operations, and the continuing support of banks, suppliers, and other parties, and/or an injection of capital or business by a white knight&rdquo .

 

In view of these multiple uncertainties, it therefore said it was unable to determine if the going concern basis of preparation of these financial statements is appropriate, as well as the adjustments that may be necessary.

 

In a separate bourse filing on Tuesday, Tee International reported differences between its audited and unaudited financial statements for the financial year ended Sep 30, 2023.

 

It attributed some of these variances to an audit adjustment for expected credit loss of the company&rsquo s inter-companies&rsquo receivables of S$537,000, or an audit adjustment for allowance for impairment loss on investment in subsidiaries of S$3,957,000. Both of these adjustments were eliminated at group consolidation level.

 

Other variances were attributed to reclassifications made for presentation purposes, while the rest were listed as immaterial adjustments.

 

Trading in the shares of Tee International has been suspended since June 2021.

 

TEE International will apply for a further extension of time to submit its revised trading resumption proposal, after it extended the longstop date of its subscription agreement with Meta5.

 

The mainboard-listed company said in a bourse filing on Saturday (Oct 7) that it expects to require more time to be able to prepare a viable resumption proposal. 

 

This comes after it signed a second supplemental agreement last Friday with Meta5 to amend the longstop date of its subscription agreement by six months to Mar 31, 2024. 

 

The extension was sought as Tee International is still in the process of fulfilling conditions set out in the conditional subscription agreement it signed with Meta5 last August to issue new shares worth S$7.5 billion.

 

Proceeds from the subscription will be used to repay eligible creditors, as working capital and to fund the growth of the company&rsquo s business.

 

In January this year, the company also entered an agreement with Meta5 for a term loan of up to S$1.8 million, to fund restructuring costs, mortgage loan instalments and operating expenses.

 

Prior to the subscription agreement, Tee International had planned to raise up to S$14 million through a new share subscription and issue, but this fell through after two investors decided not to proceed.

 

Trading in Tee International&rsquo s shares has been suspended since June 2021.

 

Tee International to hold an EGM to seek shareholders' go-ahead to first consolidate its shares, and then, undertake a rights issue.

 

According to the company on April 2, it plans to consolidate its share base at a ratio of 50 into 1, believing that the consolidated book value and share price will make it more attractive to the market.

 

Next, with irrevocable undertaking from its controlling shareholder, Tramore Global, which holds a stake of 53.4%, Tee International plans to launch a rights issue to raise net proceeds of around $3.36 million.

 

For every two consolidated shares, Tee International shareholders can subscribe for 13 rights shares.

 

According to Tee International, funds raised from the rights issue would be used for working capital and to fund growth of the business in new areas.

 

In addition, Tee International on Feb 27 has received an extension from SGX to put forward a trading resumption proposal. Its shares have been suspended since June 2021, last changing hands at 3.2 cents.