Singapore ― Following a letter by Singaporean billionaire Oei Hong Leong to Raffles Education Corporation’s (REC) board, the company’s shares dropped 26 per cent.
In his letter, which the market got a hold of, Mr Oei questions why REC’s chief executive and founder Chew Hua Seng had employed in the company “adult members of his family at high salaries.”
REC’s stock dropped 2.1 cents and closed at 6.1 cents on Monday (Oct 18).
It was reported that the company stock was already under pressure after independent auditor BDO LLP cited last week financial statements for the financial year ended Jun 30, highlighting the uncertainty of the company’s sustainability.
According to the auditor, the company’s current assets stood at S$96.8 million while liabilities amounted to S$196.4 million, reported The Straits Times.
REC is also faced with a writ by Affin Bank for an unpaid loan totalling approximately RM$410 million (S$132.9 million).
Meanwhile, REC told the Singapore Stock exchange that it was negotiating with the bank to settle amicably. The corporation is also liquidating through the sale of properties in China and Singapore.
The decision to sell was deemed particularly vicious by brokers, noting it was made prior to the company’s annual general meeting scheduled for Oct 30.
Mr Oei’s letter highlighted disclosures in the company’s latest annual report, touching on the company cash received by Mr Chew’s second wife, Ms Doris Chung Gim Lian, his two sons and his first wife’s daughter-in-law.
“These are just official family members,” the letter noted. It also included the amount for Mr Chew’s salary, bonuses and profit-sharing.
As a result, REC’s market cap lost S$29 million and closed at S$84 million on Monday from the S$113 million last Friday.
Mr Oei has openly criticised Mr Chew and REC in the last three years after losing a legal suit against Mr Chew for settlement.
In 2019, Mr Chew wrote a handwritten note promising to procure a buyer for Mr Oei’s REC shares, which are just over 10 per cent, at 44 cents per share within a month.
Having shook on the agreement, Mr Oei sued Mr Chew for allegedly backing out on his promise.
“A man’s word is his bond. A gentleman’s handshake is worth infinitely more than any signature. But not for the defendant,” said Mr Oei’s lawyers, Senior Counsel Davinder Singh and Mr Jaikanth Shankar.
Mr Oei claimed damages starting from S$15 million to S$26.5 million, depending on the calculation approach.
However, a High Court judge said the note was not a legally binding agreement.
In response to the recent letter, REC said it contained “bare allegations and material inaccuracies which are not substantiated.”
REC noted it would respond in due course, while Mr Oei is said to present more questions regarding its governance issues and less than stellar performance. /TISG
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