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Mon, Oct 12, 2020 – 12:48 pm
SUNMOON Food Company shares plunged Monday after the motherboard-listed fruit and seafood distributor announced that its parent had filed for bankruptcy in China more than two months ago.
The board also pointed to an ongoing business problem in light of the parent reorganization, and said SunMoon could raise funds from investors.
The counter lost 0.7 Singapore cents or 17.5 percent to trade at 3.3 cents in the midday break. Approximately 10.3 million shares changed hands, making it one of the most traded stocks of the morning.
In a stock market filing at 12:33 a.m. Monday, SunMoon said four of its board members learned last Friday that three entities, Shanghai Yiguo E-Commerce, Shanghai Winchain Supply Chain Management and Shanghai Exfresh Logistic, were placed. under voluntary bankruptcy reorganization under Chinese law. July 30th.
Shanghai Yiguo E-Commerce is the latest holding company for Yiguo General Food Pte Ltd, which in turn owns a 59.9 percent stake in SunMoon on Monday.
SunMoon’s total accounts receivable, including net prepayments or prepayments of accounts payable from Yiguo-related entities, amounted to approximately S $ 13.2 million, according to SunMoon’s latest financial statements for the period ended 30 of June.
This amount includes about S $ 12.4 million of accounts receivable from the three bankrupt Yiguo entities.
Advance payments to interested parties from April 1, 2019 through March 31, 2020 included about S $ 2.1 million for small lobsters and S $ 1.7 million for chips and seafood, when a subsidiary of SunMoon had purchased these products from two of Yiguo’s bankrupt entities.
The deadline for submitting proof of creditors’ debt regarding bankruptcy reorganization is October 19.
The SunMoon board has formed an executive committee, which will appoint professionals to advise the company on the matter, including the presentation of proof of debt.
This committee is made up of the four board members who were informed of the bankruptcy reorganization: Chairman and Chief Independent Director James Prideaux; Non-Executive Vice President, Non-Independent Director Gary Loh; independent director Ng Bie Tjin alias Djuniarti Intan; and independent director Yang Guang.
Effective immediately, the committee has taken over the management and day-to-day operations of SunMoon and its subsidiaries from the management team.
SunMoon’s management team will receive direct instructions from the executive committee.
Three of SunMoon’s other board members, non-independent directors Zhang Ye, Jin Guanglei and Liu Yuanyuan, have ties to Yiguo, a fresh food e-commerce retailer in China. Zhang and Jin are co-founders of Yiguo, while Liu is the associate director of the Yiguo group’s executive office, according to SunMoon’s website and its annual report released on September 7.
Zhang is also the CEO of SunMoon. The SunMoon group’s financial controller is Wang Hui Zhen.
The Singapore-listed agri-food company said Monday there is no certainty as to whether it can collect trade accounts receivable or debts from entities related to Yiguo.
Although its board is of the opinion that there will be a material impact on the SunMoon group’s ability to continue as a going concern, it cannot assess the impact of the reorganization of the Yiguo entities as the board does not have access to court documents. filed in Chinese courts.
The board said its current information was derived from information available in the public domain, which did not specify details of the plans and rationale for the reorganization request to the courts.
“The board has been and intends to continue exploring several possible options to address the going concern issue, including seeking investor funds,” he added.
As the newly formed executive committee has taken over the group’s management and operations, the board is of the view that trading in SunMoon shares should not be suspended, it said on Monday in response to inquiries from the Singapore Stock Exchange.
SunMoon distributes fresh fruits, vegetables, seafood, and meats. It focuses on the markets of Southeast Asia and Greater China.
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