CORDLIFE on Monday (May 13) said that it intends to terminate the S$8.2 million private placement announced on Apr 17.

 

This comes after the High Court upheld an interim injunction that restrains the company from issuing new shares temporarily and dismissed its appeal to overturn it.

 

Controlling shareholder Nanjing Xinjiekou Department Store, as well as non-independent non-executive directors Zhai Lingyun and Chen Xiaoling had filed an injunction application against the company, its acting chairman Ho Choon Hou, independent directors Yeo Hwee Tiong and Titus Cheong, non-independent non-executive directors Yiu Ming Yiu and Chow Wai Leong, and group chief executive Ivan Yiu (Yiu Pang Fai).

 

Pending a hearing on this application, an interim injunction was granted by the High Court on Apr 19. On Apr 25, the company filed a setting aside application to set aside the interim injunction, which was, however, dismissed on May 10.

 

On Monday, the troubled cord blood bank said that the Ministry of Health (MOH) has issued it a notice highlighting the importance of having local directors ahead of its May 14 annual general meeting (AGM) that will decide if three local directors will be replaced.

 

MOH said that Cordlife&rsquo s board should provide sufficient oversight and directions to its local management and laboratory operations teams. The new board should also respond expediently to the MOH&rsquo s queries and ensure business continuity while rectifying its lapses, the ministry added.

 

As the new board should ensure a smooth and proper transition, particularly in relation to all outstanding regulatory matters, a relevant factor given the company&rsquo s present circumstances would be whether the board members will be present in Singapore, said MOH.

 

Nanjing Xinjiekou wants to remove four directors &ndash acting chairman Dr Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. Wong has said he will retire after the AGM.

 

The substantial shareholder also seeks to appoint three new directors &ndash Dr Teo Tong Kooi, Dr Xu Tianhong and Cai Yong &ndash to replace the three Singapore-based directors, Dr Ho, Yeo and Cheong.

 

Last Friday, both Nanjing Xinjiekou and fellow substantial shareholder TransGlobal Real Estate Group specified their proposed board composition and laid out separate plans to address the company&rsquo s issues after the AGM.

 

Nanjing Xinjiekou &ldquo failed to demonstrate commitment to Cordlife&rdquo : TransGlobal

After the two announcements, TransGlobal issued an open letter to shareholders ahead of the group&rsquo s May 14 AGM, stating it was &ldquo gravely concerned with the contents&rdquo of Nanjing Xinjiekou&rsquo s open letter on May 10.

 

TransGlobal said in the letter that Nanjing Xinjiekou&rsquo s nominee directors Zhai and Chen were not actively involved with MOH&rsquo s investigations and only attended board meeting overseas.

 

Despite acting chair Ho&rsquo s &ldquo repeated invitations&rdquo to meet Singapore Exchange and MOH, Chen has only attended one meeting with MOH, while Zhai has not met either.

 

TransGlobal also claimed that the two directors lacked &ldquo any meaningful commitment&rdquo to Cordlife, as Zhai was unable to attend the AGM in-person due to business commitments.

 

As Zhai was chair of Shanghai-listed Nanjing Xinjiekou&rsquo s own board, TransGlobal said he &ldquo sets the tone and direction&rdquo for the company and its nominee directors.

 

His refusal to attend therefore shows that Cordlife is not a priority, said TransGlobal.

 

The substantial shareholder also pointed to Zhai and Chen postponing their Commercial Affairs Department interviews as not demonstrating willingness to cooperate with the authorities.

 

&ldquo We are highly concerned that the proposed directors (by Nanjing Xinjiekou) will adopt the same approach in relation to dealing with Cordlife&rsquo s Singapore matters,&rdquo it added.

 

As Nanjing Xinjiekou&rsquo s proposed directors are not based in Singapore, TransGlobal believes this &ldquo underscores Nanjing Xinjiekou&rsquo s lack of commitment to being on the ground... and making meaningful efforts to turn Cordlife around&rdquo .

 

They also highlighted that Nanjing Xinjiekou does not appear to have experience managing Singapore-listed companies or Singapore-based companies in the healthcare or health sciences sector, despite Nanjing Xinjiekou claiming to have a &ldquo track record&rdquo that can turn Cordlife&rsquo s fortunes around.

 

The letter urged shareholders to vote against the resolutions tabled by Nanjing Xinjiekou.

More than half its cash and cash equivalents, as well as fixed deposits, are in India and Malaysia, says the cord-blood bank

 

BELEAGUERED cord-blood bank Cordlife : P8A 0% has provided reasons for its proposed private placement, in a bourse filing addressing shareholders&rsquo concerns ahead of its May 14 annual general meeting (AGM).

 

The company&rsquo s operations in Singapore, though suspended by the Ministry of Health (MOH) since last December, continue to incur fixed running costs, said Cordlife during the midday market break on Friday (May 10). It added that it does not expect positive cash flow in Singapore until the suspension is lifted.

 

Given that more than half its cash and cash equivalents, as well as fixed deposits, are situated in India and Malaysia, the group said it does not want to compromise its overseas operations by diverting cash solely to address the needs of its operation in Singapore.

 

It added that as most of the cash collected in these two countries is from advance payments by clients based there, it is &ldquo prudent&rdquo to not exhaust the cash in those countries, &ldquo in order to maintain its ongoing obligations to these clients, as well as to ensure sufficient working capital for its ongoing operations&rdquo .

 

Additionally, transferring funds back to Singapore is subject to regulations in the respective jurisdictions, it added.

 

As at Dec 31, 2023, Cordlife had cash and cash equivalents of S$7.1 million, and fixed deposits of S$6.1 million. 

 

It announced on Apr 17 its proposal to raise S$8.2 million by issuing some 51.2 million new ordinary shares at S$0.16 apiece. Days after, one of two substantial shareholders in a boardroom tussle &ndash Nanjing Xinjiekou Department Store &ndash sought an injunction to cancel the proposed private placement.

 

An interim injunction to restrain the company from issuing new shares was granted by the High Court on Apr 19.

 

Cordlife on Friday said that at this juncture, it is unlikely the proposed private placement will be completed before its AGM. Nonetheless, if the placement were to take place before the meeting, subscribers would be able to vote on any of the resolutions tabled.

 

Responding to a query on why a rights issue was not offered to existing shareholders, Cordlife said that a private placement offers a shorter timeline, greater certainty and less cost to address its &ldquo urgent cash needs&rdquo . This is especially so as investors had reached out directly to the company.

 

Additionally, Cordlife highlighted that the MOH suspension and ongoing investigations, limited to its operations in Singapore, do not affect its overseas subsidiaries&rsquo operations.

 

&ldquo The entities in the other markets outside of Singapore operate independently, with their own dedicated teams, and adhere to their respective local laws and regulations,&rdquo said the cord-blood bank.

 

Responding to the possibility of changing the name of Cordlife in Singapore, it said that its immediate focus is on its rectification efforts in Singapore to address the lapses identified by MOH.

 

&ldquo Nonetheless, it is carefully assessing its next steps and will consider all suitable options to strengthen its business,&rdquo it added.

 

While one shareholder intends to revamp the board, the other stresses the importance of retaining three Singapore-based directors.

SINGAPORE &ndash The two substantial shareholders in Cordlife&rsquo s boardroom tussle on May 10 set out their separate plans to address the cord-blood bank&rsquo s troubles after an upcoming May 14 annual general meeting (AGM).

 

Cordlife was responding to queries by the Singapore Exchange (SGX), which had asked what the resultant board would do to resolve the company&rsquo s ongoing issues if the resolutions in the two shareholders&rsquo respective requisition notices are passed.

 

Substantial shareholder Nanjing Xinjiekou Department Store has filed resolutions to remove four directors: acting chairman Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. (Mr Wong has separately announced his departure from the board on May 14.)

 

Nanjing Xinjiekou also seeks to appoint three new directors: Dr Teo Tong Kooi, Dr Xu Tianhong and Mr Cai Yong to replace the three Singapore-based directors, Dr Ho, Mr Yeo and Mr Cheong.

 

Cordlife&rsquo s other controlling shareholder, TransGlobal Real Estate Group, has requisitioned to remove one director, Mr Zhai Lingyun, in a separate notice.

 

The boardroom dispute is playing out in the wake of Singapore&rsquo s Ministry of Health (MOH) uncovering lapses in Cordlife&rsquo s storage of cord blood samples. The ministry suspended the company from collecting or processing new cord blood for six months, starting in December 2023, as a result.

 

SGX, noting that the company has not explained how the resultant board will ensure continuity, and how it will work with the relevant authorities to resolve the current issues in its May 6 response, asked for clarity on how these will be ironed out.

 

Nanjing Xinjiekou Department Store

 

In its response to SGX, Cordlife reported that, assuming all resolutions in Nanjing Xinjiekou&rsquo s resolutions are carried at the upcoming AGM, the new board will comprise the following directors:

 

Mr Zhai Lingyun (non-independent, non-executive director)

Ms Chen Xiaoling (non-independent, non-executive director)

Mr Yiu Ming Yiu (non-independent, non-executive director),

Mr Chow Wai Leong (non-independent, non-executive director)

Dr Teo Tong Kooi (independent and non-executive director)

Dr Xu Tianhong (independent and non-executive director) and

Mr Cai Yong (independent and non-executive director).

Mr Zhai and Ms Chen, as directors nominated by Nanjing Xinjiekou, proposed to reconstitute the following committees of the resultant board: the audit and risk committee, the nominating committee, the remuneration committee and the committee of inquiry.

 

A proposal has also been made to make arrangements for existing director Ms Chen to remain in Singapore for at least the next few months to provide support and facilitate a smooth handover of board matters to the newly appointed directors.

 

Ms Chen and Dr Teo said they will work with the Singapore regulators, including SGX RegCo and MOH, as well as the cord-blood bank&rsquo s customers, to address ongoing concerns in Singapore.

 

Among other proposals on corporate governance, Nanjing Xinjiekou is also recommending the appointment of additional directors and a new group chief executive officer, as well as engagement with third-party professionals.

 

On the operational front, this substantial shareholder proposes to transfer its existing resources and manpower overseas, including the laboratory and technical experts from China, the United States and Hong Kong, to Cordlife.

 

&ldquo This is aimed at enhancing the technical processes and introducing industry best practices to Cordlife&rsquo s operations, thereby giving further assurance to MOH and existing customers of Cordlife,&rdquo it added.

 

Nanjing Xinjiekou holds around 20.3 per cent of Cordlife, according to Cordlife&rsquo s 2023 annual report. Together with its affiliate, China Stem Cells (East) Company, it holds 30.2 per cent.

 

TransGlobal Real Estate Group

 

Cordlife told SGX that if only the resolutions in the TransGlobal&rsquo s resolution notice are carried out at the AGM, the new board will comprise the following directors:

 

Ms Chen Xiaoling (non-independent, non-executive director)

Mr Yiu Ming Yiu (non-independent, non-executive director)

Mr Chow Wai Leong (non-independent, non-executive director)

Dr Ho Choon Hou (acting chairman and non-independent, non-executive director)

Mr Yeo Hwee Tiong (independent director) and

Mr Titus Jim Cheong Tuck Yan (independent director).

Dr Ho, Mr Yeo and Mr Cheong, who are on Nanjing Xinjiekou&rsquo s list of directors to be replaced, said that they are actively managing Cordlife&rsquo s ongoing issues with &ldquo genuine concern and care for the company&rdquo .

 

They stressed that it is important that they stay on because they know the issues raised by the lapses in the storage of cord-blood units, have been involved in the rectification, and are clear about what needs to be done to turn the company around, among other reasons. They added that their being based in Singapore means they can tap the strong networks of relationships they have with relevant parties in the Republic.

 

About 400 Cordlife parents attend town hall to explore recourse for damaged cord blood units

While Nanjing Xinjiekou said in a letter to shareholders on Thursday that it was &ldquo perplexed&rdquo by Cordlife&rsquo s proposal to raise $8.1 million through a private placement of shares, the three Singapore-based directors, as well as Ms Chen, Mr Yiu and Mr Chow, said they believe the new capital is needed for the company to fulfil its obligations to local clients and operations, without compromising operations in other countries. This includes giving refunds to affected parents.

 

TransGlobal said: &ldquo The TransGlobal resultant board will continue to work with the management on addressing the potential claims by the affected parents, including issuing partial refunds where appropriate, and strengthening its laboratory operations to ensure that the licensed laboratories in each country are self-sufficient, so that the company&rsquo s operational and technical assistance can be shared across the countries in which the group operates.&rdquo

 

With KPMG having given notice on April 25 to quit as Cordlife&rsquo s external auditor, Mr Cheong and group chief financial officer Thet Hnin Yi have been looking for another auditor.

 

The six individuals named on TransGlobal&rsquo s list of the resultant board, including the three local directors, Dr Ho, Mr Yeo and Mr Cheong, said that since Cordlife&rsquo s suspension in December 2023, the company has not generated any new revenue or cash flow from the collecting of new cord-blood samples, and that the company is uncertain of the business outlook in Singapore even after the lifting of the suspension.

 

&ldquo The company does not wish to compromise the operations or regulatory obligations of the group&rsquo s entities in the other regions simply to address the Singapore entity&rsquo s immediate needs for cashflow,&rdquo they said, stressing that most of the contracts in the other regions feature upfront payment from clients.

 

TransGlobal, as one of Cordlife&rsquo s controlling shareholders, holds a 27.9 per cent stake in the company.

 

NANJING Xinjiekou Department Store is seeking the support of Cordlife shareholders to remove four directors from the board of the cord-blood bank, ahead of the group&rsquo s annual general meeting (AGM) on May 14.

 

On Thursday (May 9), Cordlife&rsquo s China-headquartered substantial shareholder urged shareholders to attend and vote decisively at the AGM, on the grounds that corporate governance failures had &ldquo eroded customer trust and shareholder value&rdquo .

 

This follows Nanjing Xinjiekou&rsquo s move to table resolutions to remove Cordlife&rsquo s acting chairman Ho Choon-Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. To replace them, it is seeking to appoint three individuals to the board &ndash Teo Tong Kooi, Xu Tianhong and Cai Yong.

 

Nanjing Xinjiekou holds around 20.3 per cent of Cordlife, according to Cordlife&rsquo s 2023 annual report. Together with its affiliate, China Stem Cells (East) Company, it holds 30.2 per cent. 

 

Nanjing Xinjiekou&rsquo s representative on Cordlife&rsquo s board, Chen Xiaoling, said: &ldquo Recent events have left us deeply disappointed with how things are run at Cordlife, especially at the board level. They have compelled us to take urgent actions to stabilise the company and restore customer trust and investor confidence.&rdquo  

 

Seven of Cordlife&rsquo s 22 tanks storing cord blood belonging to its clients have been exposed to temperatures above acceptable limits since November 2020, putting them at high risk of being damaged. The lapses were uncovered by the Ministry of Health, which has suspended the company from collecting or processing new cord blood for six months.

 

On Thursday, Nanjing Xinjiekou said that the four directors it is seeking to remove were reportedly &ldquo quick to distance themselves&rdquo from Cordlife, instead of stepping up to address the lapses. It also charged that the current board had failed to act impartially.

 

It further noted that controlling shareholder TransGlobal Real Estate Group, which has a 27.9 per cent stake in Cordlife, had requisitioned an extraordinary general meeting of its own &ldquo to oppose our resolutions&rdquo .

 

Nanjing Xinjiekou said: &ldquo To date, it is not known who leaked the material information to TransGlobal during this period, and their reasons for doing so.&rdquo

 

Nanjing Xinjiekou also questioned the suitability of Cordlife&rsquo s newly appointed chief executive officer Ivan Yiu, noting that the 34-year-old former fund manager had no experience in cord-blood banking, but was backed by Ho and other members of the board.

 

The substantial shareholder said: &ldquo We are no longer assured that Cordlife is being run by a professional team capable of making independent decisions in the interests of and for the benefit of Cordlife as a whole.&rdquo

 

Nanjing Xinjiekou also said it was &ldquo perplexed&rdquo by Cordlife&rsquo s proposal to raise S$8.1 million through a private placement &ldquo when Cordlife&rsquo s share price was near an all-time low&rdquo . It is seeking an injunction to stop this private placement. 

 

Nanjing Xinjiekou promised that the new board will adopt measures to restore confidence in the company, and ensure better corporate governance. It hopes to commence a global search for a new chief executive officer and appoint additional directors, including a medical practitioner and a lawyer based in Singapore, &ldquo to guide the management in rectifying lapses&rdquo .

 

Nanjing Xinjiekou will also transfer experienced staff from its various offices in China, the US and Hong Kong, if necessary, to Cordlife to improve operations and capture new opportunities, it said. 

 

In an open letter to shareholders, it said that the new board will implement a &ldquo full crisis management plan&rdquo immediately upon handover. This could include hiring technical specialists and experts to enhance staff training and supervision of Cordlife&rsquo s operations. It may also entail assisting clients who wish to transfer their cord blood units to another cord-blood bank, subject to and taking into consideration the Ministry of Health&rsquo s requirements and directives. 

 

Nanjing Xinjiekou said: &ldquo We are committed to do what is within our power to salvage Cordlife. We believe that, with your continuous support and belief in Cordlife&rsquo s potential, we will rehabilitate Cordlife and emerge stronger from the darkest chapter in its history.&rdquo

 

CORDLIFE&rsquo S substantial shareholder Nanjing Xinjiekou Department Store said its nominee Philip Securities will exercise its rights as a member of Cordlife &ndash on Nanjing Xinjiekou&rsquo s instructions &ndash for an extraordinary general meeting (EGM) to be held on May 23.

 

In a May 6 letter posted to the bourse on Wednesday (May 8), Nanjing Xinjiekou said the EGM will be for shareholders to consider and pass its requisitioned resolutions, which were previously included in Cordlife&rsquo s notice of its annual general meeting (AGM) dated Apr 29.

 

While the department store operator acknowledged that its requisitioned resolutions will be tabled at Cordlife&rsquo s upcoming AGM on May 14, it added that this &ldquo does not preclude (Nanjing Xinjiekou&rsquo s) rights&hellip to nevertheless convene the EGM&rdquo .

 

In response, Cordlife said it is currently seeking legal advice on the May 6 letter viewed in light of Nanjing Xinjiekou&rsquo s first requisition notice dated Mar 13, given that the resolutions contained were already included in its AGM notice.

 

Copies of Nanjing Xinjiekou&rsquo s EGM notice were dispatched to Cordlife&rsquo s shareholders and advertised in The Business Times&rsquo May 7 edition of the paper.

 

The notice contained a total of eight ordinary resolutions.

 

Like its resolutions to be tabled at Cordlife&rsquo s May 14 AGM, the EGM resolutions have called for the removal of four directors &ndash acting chairman Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong.

 

Wong is also the company&rsquo s former chairman, who stepped down in February.

 

Another three resolutions concerned the appointment of three individuals to the board &ndash Teo Tong Kooi, Xu Tianhong and Cai Yong.

 

The final and eighth resolution called for the removal of any other directors who may have been appointed between Mar 13 and the date of the upcoming EGM.

 

If no directors are appointed during this period, the eighth resolution will not be tabled for shareholders&rsquo approval.

He also notes the estimated timeline of one year to complete further tests is reasonable due to operational considerations and other factors

 

THERE are &ldquo limits&rdquo to how much the government can intervene in the issue of compensation and refunds requested by customers of embattled cord-blood bank Cordlife Group : P8A +5%, said Senior Minister of State for Health Janil Puthucheary in Parliament on Wednesday (May 8).

 

This is because cord-blood banking is an &ldquo elective, commercial service provided by the private sector&rdquo and customers have entered into contracts with such providers, to which the Health Ministry (MOH) is not a party, he added.

 

He was answering questions from Members of Parliament (MPs) on Cordlife&rsquo s temperature lapses, which caused some 7,500 cord-blood units stored in two tanks and a dry-shipper to be damaged or deemed at &ldquo high risk of being adversely affected&rdquo .

 

Seven out of 22 tanks had been exposed to temperatures above acceptable limits at different periods since November 2020. The lapses were uncovered by MOH, which suspended the cord-blood bank from collecting or processing new cord blood for six months.

 

Two Workers&rsquo Party MPs were among those asking about refunds and compensation. Sengkang GRC MP Louis Chua asked if MOH could ensure that affected Cordlife customers receive a baseline level of compensation.

 

Hougang MP Dennis Tan asked if the ministry would consider strengthening the obligations of commercial providers, and require a full refund of fees if stored cord blood is found to be unusable.

 

In response, Janil said MOH understands the &ldquo anxiety and concerns amongst parents&rdquo due to the lapses, but there are limits to intervention as MOH is not a party to these commercial contracts.

 

&ldquo Government cannot overstep the law,&rdquo he said.

 

However, the ministry is actively supervising Cordlife to ensure the proper completion of further tests in the affected tanks, to achieve a high level of confidence in the findings.

 

Cordlife previously said it will send for testing more than 200 samples &ndash which it termed a &ldquo statistically meaningful number&rdquo &ndash of cord-blood units from the five tanks which were found to be low risk, to provide more assurance in the testing results.

 

MOH said in a statement then the larger sample must reach a 99 per cent confidence level, which means that 99 per cent of the samples tested must pass both potency and viability tests.

 

&ldquo Given the sample sizes and testing capacity available, this will take another year,&rdquo Janil noted on Wednesday.

 

He added that the estimated timeline of one year was reasonable due to the full context of the case, which involves operational considerations, Cordlife&rsquo s resources and the rectifications it has been ordered to make to mitigate further temperature incidents, as well as resources that are available at the third-party laboratories receiving the sample.

 

For example, under operational considerations, he highlighted that each tank contains several cord-blood units that were retrieved and stored under different conditions. Retrieving the samples for testing, therefore, requires considering the processing methods at the time of freezing.

 

&ldquo You don&rsquo t want in the course of establishing the potency of the unit to then invalidate the potency of that sample. So you have to make sure that there&rsquo s no inadvertent compromise to the cord-blood unit,&rdquo he said.

 

MOH will try to expedite the parts of the process that are under its control, he said.

 

The ministry will also closely monitor Cordlife&rsquo s dissemination of information to customers and the public, as well as progress in addressing the deficiencies identified and in making improvements.

 

These include directing Cordlife to properly validate and implement its new temperature monitoring system, revalidate its processing method for cord-blood units, and enhance staff training and supervision of its operations.

 

Cordlife on Tuesday said it started hiring more specialists to lead its laboratory teams as part of a major strategic overhaul.

 

Cord-blood transfer conditions

Janil reiterated that MOH discussed the issue with other cord-blood banking providers, who are prepared to facilitate the transfer of Cordlife customers&rsquo cord-blood units, should customers opt to do so.

 

Besides Cordlife, there are two other private cord-blood banks in Singapore: Cryoviva (Singapore) Laboratory Services and StemCord. There is also one public bank, the Singapore Cord Blood Bank.

 

Parents who wish to transfer their cord-blood units can contact Cordlife and the receiving cord-blood bank to discuss the transfer arrangements, he said.

 

However, Janil urged parents &ldquo to carefully consider the risks of doing so&rdquo .

 

This is given the logistical complexity of making a physical transfer at sub-zero temperatures, particularly when the cord blood is not ascertained to be affected, he said.

 

The other three cord-blood banks also indicated that there are specific conditions that have to be met before it can receive the cord-blood units from Cordlife customers.

 

&ldquo All three cord-blood banks have processes in place to facilitate the transfer of the cord-blood units, but they will only accept cord-blood units that are demonstrated to be still viable,&rdquo he said.

 

He added that the receiving cord-blood banks are &ldquo unlikely to be able to guarantee the viability of cord-blood units&rdquo that are transferred from Cordlife.

 

&ldquo There is some risk to the customers associated with making the choice for the transfer, and it will take some time,&rdquo Janil said.

Among the new hires are two lab directors to enhance in-house technical expertise and improve clinical governance standards

 

CORDLIFE : P8A 0% has begun hiring more specialists to lead its laboratory teams as part of a major strategic overhaul, after lapses were found in the private cord blood bank&rsquo s storage processes.

 

On Tuesday (May 7), Cordlife said: &ldquo The company has commenced extensive training aimed at cultivating a stronger sense of accountability and responsibility among its staff.&rdquo

 

Cordlife has recruited two lab directors to enhance in-house technical expertise and improve clinical governance standards. The group is also reaching out to former staff from its processing and storage facilities in other markets to support laboratory operations in Singapore.

 

In November 2023, the Ministry of Health (MOH) said Cordlife would be suspended for six months from collecting, testing, processing or storing new cord blood and human tissues. This was after seven of 22 cord-blood storage tanks at Cordlife were found to have been exposed to temperatures above acceptable limits at different periods from November 2020. 

 

Apologising to Cordlife&rsquo s clients, group chief executive officer Ivan Yiu said: &ldquo We are diligently working on ways to minimise the impact on our clients.&rdquo

 

The Business Times reported in April that at least two groups of Cordlife customers are seeking advice over class-action lawsuits, after more than 7,000 cord-blood units were found to be damaged or at risk of being adversely affected. 

 

In response to media queries on the letter of demand from solicitors acting on behalf of one of its clients as well as the notice of a claim lodged against the company in the Small Claims Tribunals by another client, Yiu said: &ldquo Although we have sought legal advice on the claims and allegations, we want to address the issues amicably and hope that the affected clients will work with us to achieve resolution.&rdquo

 

As at Apr 30, a &ldquo significant&rdquo number of affected clients have accepted Cordlife&rsquo s offer of a refund of annual fees from the year of the temperature excursion, the group said.

 

It added: &ldquo The company will continue to store cord blood units for these clients until the maturity of their service agreements when their children turn 21, without charge.

 

&ldquo In the event a transplant physician determines that the cord blood unit cannot be successfully used for an approved cord blood transplant solely because it does not meet the viability criteria, Cordlife will make every effort to find a suitable replacement.&rdquo  

 

Since December, Cordlife has enlisted a consultant from the Foundation for the Accreditation of Cellular Therapy for guidance. The US-based expert, who has been guiding Cordlife&rsquo s technical team, will be on-site in mid-May to help Cordlife reinforce processes. 

 

Addressing the financial impact of the MOH suspension, Yiu said Cordlife&rsquo s FY2023 performance has been affected. 

 

Cordlife&rsquo s shares have tumbled since November 2023. On Nov 30, 2023, they closed at S$0.46. The share price is now down 74 per cent to S$0.12 as at May 7. 

 

Yiu said: &ldquo FY2024 will be dedicated to rebuilding Cordlife&rsquo s foundation, with a focus not just on growth but also on long-term sustainability. The implementation of enhanced processes and boosting staff expertise and experience will make us stronger so we can expand to new markets and capture adjacent opportunities.&rdquo

 

Despite the suspension, Cordlife has continued to incur fixed running costs in Singapore to meet its contractual obligations with clients, the group said. 

 

Cordlife added that it will not dispose of any cord blood units belonging to clients whose service agreements are nearing maturity while the group works towards finding resolution. 

 

Yiu said: &ldquo We kindly ask for their patience as we carefully assess our next steps, and we will contact these clients as soon as we have determined the most appropriate course of action.&rdquo

The resolutions at the company&rsquo s upcoming AGM seek to replace a substantial number of directors

 

CORDLIFE Group&rsquo s directors offered different takes on who will oversee the company&rsquo s ongoing developments in Singapore, if resolutions to oust several board members pass at its upcoming annual general meeting (AGM).

 

The directors were responding to queries from the Singapore Exchange (SGX) in a Monday (May 6) bourse filing, ahead of its AGM on May 14.

 

Cordlife substantial shareholder Nanjing Xinjiekou Department Store had filed resolutions to remove four directors: acting chairman Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. (Wong has separately announced that he will retire from the board from May 14.)

 

Nanjing Xinjiekou also seeks to appoint three new directors: Teo Tong Kooi, Xu Tianhong and Cai Yong.

 

Cordlife&rsquo s controlling shareholder TransGlobal Real Estate Group also requisitioned to remove one director, Zhai Lingyun, in a separate notice,

 

This shareholder dispute comes as Singapore&rsquo s Ministry of Health (MOH) uncovered lapses in Cordlife&rsquo s storage of cord blood, and suspended it from collecting or processing new cord blood for six months.

 

Noting that the AGM resolutions seek to replace a substantial number of directors, SGX queried Cordlife on how the board intends to cooperate with the authorities and ensure continuity in resolving the issues it faces.

 

Cordlife&rsquo s board offered three different sets of responses. In the first set, Ho, Yeo and Cheong said that they are &ldquo unaware of any strategy or plan&rdquo on this front. They added that to their knowledge, the Nanjing Xinjiekou directors have not been personally involved nor physically present in Singapore to participate in the resolution of matters.

 

The trio said they are concerned that the proposed new directors &ldquo will not have sufficient time to grasp the issues at hand&rdquo , particularly in engaging MOH, SGX and affected clients.

 

In addition, Cordlife&rsquo s external auditor KPMG has recently resigned. &ldquo It is therefore even more important for the current board, who is familiar with the company, to stay on in order to assist in the appointment of a new external auditor,&rdquo they said.

 

The second set of responses came from Cordlife&rsquo s non-independent, non-executive directors Zhai Lingyun and Chen Xiaoling, who are Nanjing Xinjiekou&rsquo s nominee directors. They said that the SGX&rsquo s question should be addressed by the board after the AGM.

 

&ldquo The resultant board may convene an emergency meeting to discuss these issues after the AGM and update SGX and the shareholders accordingly,&rdquo said Zhai and Chen.

 

A third response was offered by Chow Wai Leong, a non-independent, non-executive director of Cordlife. Chow said that he will continue to commit time to &ldquo existing reparation work and collaboration with the relevant authorities&rdquo , but that the continuation of his service depends largely on the new board.

 

Question of Singapore-based directors

In a separate question, SGX asked who will be the directors based in Singapore &ndash if all the AGM resolutions pass &ndash and who would be able to oversee the ongoing developments in the company.

 

There were three sets of responses to this. First, Cordlife noted that if all resolutions are passed at the AGM, the board will be as follows:

 

Chen Xiaoling (non-independent non-executive director)

 

Yiu Ming Yiu (non-independent non-executive director)

 

Chow Wai Leong (non-independent non-executive director)

 

Dr Teo Tong Kooi (independent and non-executive director)

 

Dr Xu Tianhong (independent and non-executive director)

 

Cai Yong (independent and non-executive director)

 

The company said that although Yiu and Chow have listed their country of principal residence as Singapore, they are mostly not in Singapore as they are required to travel extensively for work.

 

In the second set of responses, Ho, Yeo and Cheong said that none of the proposed new independent directors will be based in Singapore to oversee the ongoing matters.

 

In the third response, Zhai and Chen cited that Teo is a permanent resident of Singapore. They added that the new directors will do their best to ensure a &ldquo smooth transition&rdquo if the resolutions are passed.

 

Plans for new appointments

Another query from SGX touched on whether Cordlife intends to appoint additional independent directors with experience in cord blood operations, or in serving on the boards of SGX-listed companies.

 

Ho, Yeo and Cheong responded that the board is interviewing new independent directors with relevant experience, but there is a likelihood that any new appointee may be removed at the AGM.

 

Meanwhile, Zhai and Chen said that the reconstituted board will evaluate the needs of the group and, where necessary, appoint additional directors.

Due to the different circumstances faced by each affected family, partners at law firm Withers KhattarWong say the case has many complexities

 

A REPRESENTATIVE action suit against beleaguered cord-blood bank Cordlife could take at least two years to conclude, should affected Cordlife customers decide to go through with such a lawsuit, said partners at law firm Withers KhattarWong.

 

However, the law firm stressed that the case is at an early fact-gathering and consolidation stage, and that it is not recommending that customers take up such a representative action &ndash also known as a class action-type suit &ndash at this juncture.

 

This comes after Withers KhattarWong held a town hall meeting for affected Cordlife customers on Friday (May 3). The discussion covered the possible legal actions they could take, as well as the stages that are likely to take place in a class-action lawsuit.

 

Around 430 parents and other customers attended the two-hour-long meeting in-person or over Zoom. The law firm is currently onboarding customers who wish to seek recourse against Cordlife.

 

They include families whose cord-blood units are no longer viable or found to be at high risk, those who were informed that their cord-blood units are at low risk, and those whose cord-blood units are still undergoing testing.

 

The Business Times understands the quoted onboarding fee is S$300 per family, regardless of whether the family has cord-blood units for one affected child or more.

 

To recap, seven of Cordlife&rsquo s 22 storage tanks have been exposed to temperatures above acceptable limits at different periods since November 2020. The lapses were uncovered by the Ministry of Health (MOH), which suspended the cord-blood bank from collecting or processing new cord blood for six months.

 

Thus far, MOH&rsquo s expert panel has found that around 7,500 cord-blood units stored by Cordlife in two tanks and a dry shipper have been damaged or deemed at &ldquo high risk of being adversely affected by the temperature excursions&rdquo .

 

Shaun Leong, equity partner at Withers KhattarWong and one of the partners who helmed the town hall, said the meeting &ldquo gathered a lot of momentum&rdquo from attendees and sign-ups have been robust. But he did not provide exact figures as the case is still at an early stage.

 

Once the consolidation and fact-finding stage has concluded, the next stage will likely involve engaging and negotiating with Cordlife, as well as engaging with MOH, based on a presentation deck by Withers KhattarWong.

 

It also indicated that if the legal action progresses beyond this stage, customers should be prepared for arbitration, as well as hearings in court and officially with MOH.

 

Urgency from parents

Shanta Sundarason, an affected customer who helped to organise the town hall, said a concern brought up by parents was related to the cord blood from children who have turned or will soon turn 21.

 

This is because the contract from Cordlife, signed by parents, expires when the child turns 21. The child, now an adult, can then take up a new contract to retain ownership of the cord blood, or allow it to be disposed of or donated to the national cord-blood bank.

 

Parents fear that cord-blood units would be unilaterally disposed of by Cordlife if they are deemed non-viable once the 21-year period is up.

 

In addition, cord blood that is at high risk of being adversely affected by the temperature excursions may also not be accepted by other cord-blood banks, even if parents wish to transfer their cord-blood units.

 

Leong said the firm will &ldquo allocate its resources accordingly&rdquo to the group of parents that conveyed their urgency, without elaborating on specific actions.

 

Other concerns raised by customers include uncertainty over whether their children&rsquo s cord blood is truly viable or not, as well as concern about what protection measures are currently in place for the cord-blood units stored at Cordlife.

 

Leong noted that Cordlife customers who approached the firm sought various outcomes.

 

While some are seeking litigation options, others want more information, or simply wish to make sense of the terms Cordlife used in their correspondence. For example, parents questioned the meaning of the term &ldquo non-viable&rdquo , which Cordlife used to describe some of the cord-blood units that have been affected.

 

&ldquo Many parents would prefer to gather the facts before making an informed decision (on whether to pursue legal action),&rdquo Leong said.

 

Some parents who accepted Cordlife&rsquo s refund offer but still seek compensation from the company have also approached the law firm.

 

Case with many complexities

Due to the different circumstances faced by each affected family, partners at Withers KhattarWong noted the case had many complexities, and it was key for the law firm to identify the different sets of circumstances properly.

 

&ldquo (People signed up) essentially to protect their kids, and it&rsquo s important to try to address that in the best way possible, which will mean different things for different people,&rdquo said Chenthil Kumarasingam, Withers KhattarWong&rsquo s Asia regional division leader for dispute resolution.

 

As for the possibility of filing a representative action, Kumarasingam noted that there has to be &ldquo some common ground&rdquo between the representatives and the groups they are representing. In Cordlife&rsquo s case, this refers to the terms in the contracts that each customer has signed.

 

&ldquo Part of the complexity here is that some of Cordlife&rsquo s terms have changed quite dramatically over the years,&rdquo he said.

 

For example, there were changes in the limitation of liability between earlier and later contracts, and marketing materials have also changed, he noted.

It says it was unable to determine the exact financial impact of the letter of demand at this juncture

 

CORDLIFE received a letter of demand from one of its clients alleging the cord-blood bank has breached its service agreement, as well as a breach of the duty of care in negligence.

 

On Thursday (May 2), Cordlife noted that this was the first letter of demand received by the company from legal representatives of an affected client.

 

It also announced a notice of claim received in February this year, which was lodged against the company in the Small Claims Tribunals alleging the damage of another client&rsquo s child&rsquo s cord-blood unit stored by Cordlife.

 

Proceedings for this claim are &ldquo presently still ongoing&rdquo .

 

While Cordlife did not state the amounts claimed by both clients, it said the sum being claimed under the letter of demand is &ldquo one that falls within the jurisdiction of the District Courts&rdquo .

 

This indicates that the sum claimed by the letter of demand falls within the range of S$60,000 to S$250,000.

 

The Small Claims Tribunals deals with claims not exceeding S$20,000 &ndash or S$30,000 if there is a memorandum of consent signed by both the client and service provider, though Cordlife said this was &ldquo not the case&rdquo .

 

The company said it was unable to determine the exact financial impact of the letter of demand at this juncture, though it has been advised that there are &ldquo grounds to challenge the claim and allegations made&rdquo .

 

If the company is ultimately required to settle the claim in the letter of demand, along with the small claim, it would &ldquo likely result in a negative impact&rdquo on its financial position for the year ending Dec 31, 2024.

KPMG also addresses uncertainties in providing an audit opinion on the cord-blood bank&rsquo s refunds and claims

 

CORDLIFE&rsquo s independent auditor KPMG will not be seeking reappointment after issuing a disclaimer of opinion on the financial statements for FY2023. (*see amendment note)

 

On Thursday (Apr 25), Cordlife said KPMG had given written notice to retire as the company&rsquo s external auditor, though its disclaimer of opinion was not raised as the reason for KPMG&rsquo s decision to do so.

 

The cord-blood bank added that it &ldquo is not aware of any other circumstances connected with KPMG&rsquo s decision not to seek reappointment as auditor of the company at the FY2023 annual general meeting, that should be brought to the attention of shareholders&rdquo .

 

Earlier, KPMG had submitted a disclaimer of opinion in its independent auditor&rsquo s report dated Apr 24, stating that it had not been able to obtain &ldquo sufficient appropriate audit evidence&rdquo to provide a basis for an audit opinion on several areas.

 

These areas included the company&rsquo s compliance with laws and regulations, given Cordlife&rsquo s ongoing investigations by the Ministry of Health (MOH) and the Commercial Affairs Department (CAD).

 

KPMG also addressed uncertainties in providing an audit opinion on the subject of Cordlife&rsquo s refunds and claims, after the company said it would waive all future annual fees and initiate a refund for clients affected by its recent case of damaged cord-blood units.

 

The auditor said it was unable to obtain sufficient audit evidence over the number of affected customers with confirmed damaged cord blood arising from temperature excursions as at Dec 31 2023 &ndash and therefore the &ldquo quantification and significance&rdquo on any adjustments to be recorded in Cordlife&rsquo s financial statements as a result.

 

KPMG further highlighted that &ldquo there are no alternative audit procedures that can be performed&rdquo in applying the going concern basis of preparation for Cordlife&rsquo s financial statements.

 

This is because investigations by MOH and CAD remain ongoing, while Cordlife&rsquo s business in Singapore remains suspended.

 

&ldquo The business operations in Singapore is a significant component of the group operationally and its financial results are material to the overall group,&rdquo it added.

 

As at end-June 2023, total revenue of Cordlife&rsquo s business operations in the Republic represented 45 per cent of the group&rsquo s FY2023 results, while total assets of the Singapore business comprised 51 per cent.

 

The Singapore business&rsquo operations was also the largest contributor to the group&rsquo s profit before tax for FY2023, highlighted KPMG. 

 

Lastly, the auditor said it was unable to obtain sufficient audit evidence regarding subsidiaries that require financial support from Cordlife.

 

The company separately on Thursday also flagged material differences between its audited, and unaudited condensed interim, financial statements for FY2023.

 

Among other financial metrics, the group&rsquo s earnings per share (EPS) for the full year was restated to S$0.0138, 4.8 per cent lower than the earlier-posted FY2023 EPS of S$0.0145.

 

Revenue was S$55.7 million based on audited statements versus S$55.9 million in the unaudited results, while the company&rsquo s profit stood at S$3.5 million instead of S$3.7 million.

 

Cordlife said the discrepancies were due to the &ldquo recognition of contract liabilities... during the preparation of the audited financial statements&rdquo . 

 

These liabilities were related to future storage obligations for all active clients whose cord-blood units are stored in the company&rsquo s affected &ldquo Tank A&rdquo , which refers to one of the storage tanks at Cordlife that were exposed to temperatures above acceptable limits at different periods from November 2020.