A CREDITOR of watch-listed USP Group has filed a winding-up application against the company.

 

Anne Lee King filed the application over the reimbursement of legal fees, as part of a Deed of Indemnity that the company had provided to Lee with the sum of S$95,487.64.

 

The application will be heard in the High Court on Dec 8, USP Group said in a bourse filing on Tuesday (Nov 21).

 

The company, which is on the Singapore Exchange&rsquo s financial watchlist, has been mired in several board tussles over the years.

 

In September, a duo of minority shareholders asked to convene an extraordinary general meeting (EGM) for a complete overhaul of the company&rsquo s board of directors.

 

One of the shareholders earlier this year also linked up with other minority shareholders in a bid to take control from the company&rsquo s board and give it new projects.

 

Then, the EGM was deemed invalid as the requisitioning shareholders in question were not deemed &ldquo members&rdquo of USP under the Companies Act.

 

Lee&rsquo s legal suit involved loan agreements she entered into, for the purchase of shares from former shareholders of USP.

 

Then, she claimed that she had entered into the agreements to facilitate share purchase transactions between the former shareholders and some Chinese investors, and to become a nominee shareholder for the investors.

 

USP said it is seeking advice from its solicitors on the next probable steps and/or options to be taken, and will make further announcements as and when required.

 

Melvin Tan Wei Yang and Lim Shi Wei, two shareholders who hold around 10% of the shares in USP Group BRS 0.00% , are seeking a board overhaul.

 

USP Group had received a notice from Tan and Lim requesting the company to convene an extraordinary general meeting (EGM) to change the board.

 

The notice of requisition has requested for the company to table 10 resolutions to remove five individuals who are currently the directors of the company and to appoint four other individuals as executive and independent directors.

 

The five individuals named are Tanoto Sau Ian, Djohan Sutanto, Caroline Wang Zixu, Tay Lak Khoon and Tang Mun Tak while the four others are Shek Chee Seng, Chan Chung Khang, Jason Fong Jian Sheng and Sim Mong Keang. The notice of requisition named Shek for the position of executive director.

 

This isn&rsquo t the first time that an EGM has been requested by the company&rsquo s minority shareholders to change its board.

 

On Oct 26, 2022, USP Group received a notice of requisition from Hinterland Energy Pte. Ltd., Harmonic Brothers Pte. Ltd., Hia Yi Heng and Lim Shiwei, who held around 10.0% of the total shares in the company at that time, to remove Tanoto from his position as CEO, executive director and managing director of the company. Djohan, Tay and Tang were the other individuals named. Joseph Tan Chin Aik, another director of the company, was also mentioned in the notice of requisition.

 

At the time, the EGM was not convened for several reasons. In the Nov 24, 2022 filing, USP Group noted that &ldquo [Tanoto]&rsquo s involvement in multiple legal suits does not distract him from effectively serving [as] a CEO, executive director and managing director of the company&rdquo .

 

USP Group was placed on the Singapore Exchange Securities Trading Limited&rsquo s (SGX-ST) watch-list from June 5, 2017, due to the minimum trading price (MTP) rule. The rule was removed for Mainboard issuers on May 11, 2020. The company may be removed from the watch-list if it records a volume-weighted average price of at least 20 cents and an average daily market capitalisation of $40 million or more over the last six months.

 

A COURT has ruled that USP Group : BRS 0%&rsquo s extraordinary general meeting (EGM), which was due to be held on Friday (Apr 21), need not proceed.

 

In a judgement delivered on Wednesday, Judicial Commissioner Goh Yihan declared the requisition notice for the EGM invalid, as the requisitioning shareholders were not deemed &ldquo members&rdquo of USP under the Companies Act.

 

Goh said, however, that it was &ldquo unacceptable that USP is trying to disrupt the democratic processes of the company&rdquo .

 

&ldquo I do not think it is satisfactory for USP to stifle the requisitionists&rsquo attempts to call for an EGM,&rdquo Goh noted.

 

USP had filed an originating application against the requisitioning shareholders, noting that they may not be entitled to call for an EGM as the shareholders are not &ldquo members&rdquo of the company.

 

USP chief executive Tanoto Sau Ian also sought to bring an injunction against the requisitioning shareholders to prevent them from further requisitioning an EGM under the Companies Act.

 

The shareholders &ndash Hinterland Energy, Harmonic Brothers, Hia Yi Heng and Lim Shi Wei &ndash had requisitioned for an EGM to wrest control of USP&rsquo s board, and to attempt to take the company out of the Singapore Exchange&rsquo s (SGX) financial watch-list.

 

The resolutions of the EGM included the removal of Tanoto and the company&rsquo s non-executive chairman Djohan Sutanto, as well as the appointment of four new directors &ndash one of them an executive director.

 

Goh said that the requisitioning shareholders are not &ldquo members&rdquo as their names plainly do not appear on USP&rsquo s register of members.

 

In the requisition notice, the shareholders had signed off in their own capacities, on behalf of various brokerage houses. In turn, the names of these brokerage houses appear on USP&rsquo s register of members.

 

As per the Companies Act, there are also no other means for the requisitioning shareholders to be recognised as &ldquo members&rdquo , Goh added.

 

Despite the judgement, Goh said he would have preferred to allow the democratic processes of USP to take their course, and not to intervene to prevent shareholders or members from having a voice in the affairs of a company except where absolutely necessary.

 

He also noted that USP Group had ignored an earlier court order to hold the EGM, before it filed the current orginating application. He said: &ldquo This is a blatant disregard of a court order that cannot be countenanced.&rdquo

 

Meanwhile, Goh said that Tanoto has no basis to bring a derivative action for a permanent injunction against the requisitioning shareholders, as he has not shown that USP has any reason to obtain that injunction. Tanoto was also not acting in good faith, Goh said.

 

Goh noted that the requisitioning shareholders would need to take certain steps to come within the definition of a &ldquo member&rdquo under the Companies Act, such as opening CDP accounts to hold the shares of USP.

 

He granted the requisitioning shareholders the liberty to apply for the relevant orders, to compel USP to furnish them with the relevant documentation that would enable them to set up the accounts to hold the shares in question.

 

Melvin Tan, who is chief executive of Hinterland and the intended chair for the Apr 21 EGM, said he is planning to file a new requisition in due time. He added that the requisitioning shareholders are in discussion on how to proceed.

 

It has taken a long time for the requisitioning shareholders to get the Apr 21 EGM underway. While the shareholders submitted a notice of requisition last October, USP&rsquo s board declined to convene the EGM.

 

The shareholders, who collectively control 12.2 per cent of USP, had to turn to Singapore&rsquo s courts to push the EGM through.

USP Group : BRS 0% shareholder Melvin Tan has linked up with some of the company&rsquo s minority shareholders to wrest control of the company&rsquo s board and inject new projects, including a lab-grown diamond business, into the watch-listed entity.

 

The other shareholders of USP will have the chance to vote on his proposed board composition at an extraordinary general meeting (EGM) to be held online at 10 am this Friday (Apr 21).

 

The resolutions include the removal of USP&rsquo s chief executive Tanoto Sau Ian and the company&rsquo s non-executive chairman Djohan Sutanto, as well as the appointment of four new directors &ndash one of them an executive director.

 

In a letter to shareholders appealing for their support, Tan said he hoped to &ldquo nurse USP back to good financial health and save the jobs of its dedicated workforce, comprising about 150 staff and workers&rdquo .

 

He said he has put together a team of experienced professionals with monetary resources and a pipeline of projects to revitalise USP.

 

The list of newly proposed directors comprises a consultant, an investment analyst, an accountant and the group general manager of Singapore-listed building maintenance company, ISOTeam.

 

The shareholders &ndash Hinterland Energy, Harmonic Brothers, Hia Yi Heng and Lim Shiwei &ndash submitted a notice of requisition last October, but USP&rsquo s board declined to convene the EGM.

 

The shareholders, who collectively control 12.2 per cent of USP, had to turn to Singapore&rsquo s courts to push the EGM through. Tan is chief executive of Hinterland.

 

USP was listed on the Singapore Exchange (SGX) in 2007 as Unionmet (Singapore), a Chinese indium ingot maker. Indium is a metal commonly used in the semiconductor industry.

 

Since its listing, however, the company has faced an unending stream of difficulties. There have been lawsuits, disclosure problems and difficulties staying afloat.

 

It tried various means of diversifying its business, with varying degrees of success. Most of USP&rsquo s revenue today comes from the sale of marine equipment.

 

USP reported profits for its FY2022 ended Mar 31, and for the nine-month period ended Dec 31. But the company is unable to exit the SGX watch list because its financials have not yet been audited. Its auditors retired last year and new ones have not been appointed.

 

Somewhat ironically, Tanoto joined USP&rsquo s board and management via a requisitioned EGM. In 2020, he had been voted in by 58.8 per cent of shares represented at the EGM.

 

He now owns 21.2 per cent of USP, according to a circular issued for the Apr 21 EGM.

 

Tan, in an interview with The Business Times, said USP badly needs to get off the watch list. If the company were to be delisted, it would no longer be able to tap the capital markets for funding. And it would be at the mercy of its creditors.

 

As at Dec 31, USP had S$4.1 million in cash and cash equivalents. But it had S$32 million in borrowings.

 

Tan said he was first introduced to USP in 2021, when he initially planned to make a white-knight investment of around S$3 million in the company. He subsequently introduced some business partners to the company, and these now form the group of shareholders requisitioning the EGM.

 

Hinterland owns 4.99 per cent of USP. Most of that stake was acquired in August 2021, when the company had bought 4.3 million shares for a total consideration of S$340,233.60 &ndash which works out to a price of S$0.08 per share.

 

Shares of USP closed Monday at S$0.10.

 

USP was put on the financial watch list in December 2019, after three consecutive years of pre-tax losses.

 

On Apr 12, the company was handed a notice of compliance from bourse regulator SGX Regulation (SGX RegCo). It has to appoint auditors to pore over its financials by May 31, 2023, and announce the results by a deadline agreed with the regulator.

 

Based on the results, it must apply to either be removed from the watch list, or to extend the cure period. If it does not comply, SGX RegCo will move to delist the company.

 

On Apr 17, USP said that it had reached a full and final settlement regarding some legal matters dating back to 2020.

 

USP had been in a dispute for some years with Oon Koon Cheng, who holds a substantial 28.8 per cent stake in the company, over a loan and damages relating to an acquisition.

 

Both sides have agreed to discontinue their suits. USP will pay Oon and various other parties a settlement sum.

Waste-to-energy company USP Group announced that its wholly-owned subsidiary Supratechnic will be disposing off its property at 16A Joo Koon Circle to Liang & How Contractor for a consideration of $5.3 million. Liang & How was granted the option to purchase (OTP) on Nov 22, and will expire on Dec 6. The property is Supratechnic' s headquarters that is in the business of wholesale of marine equipment and accessories.

 

The consideration was arrived at by an independent valuer RHT Valuation, commissioned by the group, as well as determined on a willing-buyer-willing-seller basis.

 

As at Nov 22, Liang & How, in accordance to the OTP terms have paid a sum of $53,000 or 1% of the consideration to United Overseas Bank (UOB) to cover the group&rsquo s existing mortgage on the property.

 

The property has been mortgaged to UOB under a mortgage executed by Supratechnic in favour of UOB. USP&rsquo s board is of the view that the this disposal is in the best interests of the group as it will allow it to redeem the mortgage as well as reduce the its outstanding trade financing and other outstanding bank loans.

 

The net proceeds from the divestment is estimated to be about $5.19 million. The net proceeds shall be transferred to UOB for the purposes of repaying the outstanding trade financing and the defaulted bank loans.

 

The group&rsquo s outstanding trade facilities and defaulted bank loans arises from previous boards and management of the group that had caused it to drawdown $9 million in trade financing and failed to reduce the financing charges imposed on the group. Further, the previous boards and management had caused the group to default on outstanding bank loans of approximately $1.67 million due to the group&rsquo s principal banker, UOB.

 

The property is currently mortgaged in favour of UOB. As such, and due to the defaulted bank loans, the UOB is entitled to exercise its rights pursuant to the mortgage which include but are not limited to a power of sale in the event of default. UOB has on various occasions indicated its intention to seek foreclosure of the property to settle the outstanding amounts owed by the group.

 

However, in the event that such actions are taken out by UOB and the property is disposed at a distressed sale price, the amount of the said distressed sale price will be less favourable than the consideration in the open market. Additionally, UOB still has the right to exercise its power of sale pursuant to the terms of the mortgage notwithstanding that shareholders&rsquo approval is not granted for the proposed disposal.

Waste-to-energy company USP Group announced that its wholly-owned subsidiary Supratechnic will be disposing off its property at 16A Joo Koon Circle to Liang & How Contractor for a consideration of $5.3 million. Liang & How was granted the option to purchase (OTP) on Nov 22, and will expire on Dec 6. The property is Supratechnic' s headquarters that is in the business of wholesale of marine equipment and accessories.

 

The consideration was arrived at by an independent valuer RHT Valuation, commissioned by the group, as well as determined on a willing-buyer-willing-seller basis.

 

As at Nov 22, Liang & How, in accordance to the OTP terms have paid a sum of $53,000 or 1% of the consideration to United Overseas Bank (UOB) to cover the group&rsquo s existing mortgage on the property.

 

The property has been mortgaged to UOB under a mortgage executed by Supratechnic in favour of UOB. USP&rsquo s board is of the view that the this disposal is in the best interests of the group as it will allow it to redeem the mortgage as well as reduce the its outstanding trade financing and other outstanding bank loans.

 

The net proceeds from the divestment is estimated to be about $5.19 million. The net proceeds shall be transferred to UOB for the purposes of repaying the outstanding trade financing and the defaulted bank loans.

 

The group&rsquo s outstanding trade facilities and defaulted bank loans arises from previous boards and management of the group that had caused it to drawdown $9 million in trade financing and failed to reduce the financing charges imposed on the group. Further, the previous boards and management had caused the group to default on outstanding bank loans of approximately $1.67 million due to the group&rsquo s principal banker, UOB.

 

The property is currently mortgaged in favour of UOB. As such, and due to the defaulted bank loans, the UOB is entitled to exercise its rights pursuant to the mortgage which include but are not limited to a power of sale in the event of default. UOB has on various occasions indicated its intention to seek foreclosure of the property to settle the outstanding amounts owed by the group.

 

However, in the event that such actions are taken out by UOB and the property is disposed at a distressed sale price, the amount of the said distressed sale price will be less favourable than the consideration in the open market. Additionally, UOB still has the right to exercise its power of sale pursuant to the terms of the mortgage notwithstanding that shareholders&rsquo approval is not granted for the proposed disposal.

 

The Singapore Exchange Regulation (SGX RegCo) has issued a query to USP Group after shares in the company surged by over 50% on Sept 22.

 

The query, which noted the &ldquo unusual price movements&rdquo in the company&rsquo s shares, asked USP Group if it was aware of any information not previously announced that could&rsquo ve caused the change.

 

It has also asked the company to confirm its compliance with the listing rules.

 

As at 4.33pm, shares in USP Group are trading 4.8 cents higher or 54.55% up at 13.6 cents. Shares in the company were trading at an intraday high of 16.2 cents, nearly double the 8.8 cents at close on Sept 21, and the highest in 52 weeks.

 

On Aug 8, USP Group announced that it was still on SGX&rsquo s watch list.

Indium ingot dealer USP Group on Sunday announced changes in the agenda for the extraordinary general meeting (EGM) scheduled for Monday, July 13 - following an interim injunction application against the company and its CEO - filed by a substantial shareholder, Oon Koon Cheng.

 

Following the grant of the interim injunction application by the High Court last week, the company is not to table three resolutions at the upcoming EGM, " including any resolution for the allotment and/or issuance of new shares, unless such resolution is limited to any issuance of shares pursuant to rights issues which are offered equally to all shareholders of the company" , USP said.

USP Corporate Presentation.(Nov 2017)