Midas CEO says shares and money in China subsidiaries and associates frozen by courts

Midas CEO says shares and money in China subsidiaries and associates frozen by courts

Chan Chao Peh
09/02/18, 12:13 am

SINGAPORE (Feb 9): Midas Holdings, the supplier of aluminium parts to the rail sector, has uncovered several litigations, enforcement orders and court documents involving its various subsidiaries and associate companies based in China.

The company also found out that certain sums of money and shares in these subsidiaries have been frozen by Chinese courts.

“As the company is still in the midst of fact findings, the board will continue to do assessment whether the group can continue as a going concern,” says Midas CEO Patrick Chew in a filing to the Singapore Exchange late Thursday night.

Midas shares have been halted from trading earlier in the day. Year to date, the stock has gained 77.8%. Last November, the company’s shares crashed by half. The company had cited reports of slowdown in China’s railway expansion as a possible reason for the drop. It has since recovered somewhat to last trade at 19.2 cents.

See: Has Midas been derailed by China's alleged crackdown on local infrastructure spending?

According to the latest announcement, Midas uncovered an enforcement order filed against wholly-owned subsidiary Jilin Midas Aluminium Industries Co for a previously undisclosed liability RMB30 million ($6.3 million).

Some RMB12 million in “unaudited” ledger balances of Midas' China-based subsidiaries, out of a total of RMB873 million as at Dec 31 2017 were frozen on court orders.

Shares held by Midas in several China subsidiaries which were frozen included those in wholly-owned Luoyang Midas Aluminium Industries and Dalian Huicheng Aluminium, as well as associate company CRRC Nanjing Puzhen Rail Transport.

The three entities together account for 44.9% of Midas’ net asset value as of Sept 30, 2017, and 52.9% of Midas’ profit before tax for the nine months to Sept 30, 2017.

“The commercial operation of the above-mentioned entities are not affected by the freezing orders,” says Chew.

Meanwhile, the company says it also “uncovered a number of previously undisclosed corporations related to certain group companies incorporated in the China". The company also cannot confirm information on the shareholdings and businesses on these corporations.”

Chew says that Midas’ board is now “actively taking steps to gather information on the court documents and previously undisclosed corporations”. The board is also trying to ascertain whether there are other transactions in order to assess the overall exposure and legal implications for the group, and to protect the group’s assets.

“The board will also consider what actions should be taken to investigate the matters and determine whether any wrongdoings have been committed and any legal redress available to the company,” he adds.

Midas is appointing Dr Xu Wei Dong, an independent non-executive director, to act as the legal representative for all of Midas’ China-incorporate entities. Xu’s approval has to be sought for payments above RMB200,000.

SembMarine's management confident of order pipeline despite stiff competition

SINGAPORE (July 23): To stay relevant, Sembcorp Marine's transforming itself to take on large scale EPC (engineering, procurement and construction) projects and offering nimble and compact solutions to customers, says CIMB-CGS Securities. It is also scouting for new technology and intellectual property to widen its service offering, preparing for the rig recovery, says CIMB-CGS, with the latest acquisition of Sevan Marine cylindrical rigs is a case in point. In a Friday report, analyst Lin Siew Khee says CIMB-CGS was right to expect a loss of $20 million-$40 million for 2Q18 as SembMarin....

After a steady 2Q, will CapitaLand Mall Trust still have room to run?

SINGAPORE (July 23): OCBC Investment Research and CGS-CIMB Securities have downgraded their ratings on CapitaLand Mall Trust (CMT) to “hold” from “buy” and “add” previously after the trust’s 2Q18 results came in line with both research houses’ expectations. While OCBC has revised its fair value estimate down to $2.10 from $2.26 after lowering its terminal growth rate assumption to 1.5% from 2% in light of ongoing macroeconomic uncertainties, CGS-CIMB’s lower target price of $2.21 compared to $2.25 previously comes on the back of a higher risk-free rate to align with that o....

City Developments cut to ‘neutral’ on expected slowdown in Singapore properties and Brexit woes

SINGAPORE (July 23): Expected slowdown in demand for Singapore’s residential properties due to the recent cooling measures and gloomy near-term outlook for UK projects from slow progress of Brexit negotiations have forced RHB to downgrade City Developments to “neutral” from “buy” with $10.50 target price. From RHB’s latest estimates, CityDev has unsold residential inventory in Singapore of around 3,300 units, with Singapore residential segment accounting for 25% of its RNAV estimate. RHB expects the latest round of property cooling measures to adversely impact margins at its dev....
Investing opportunities in 2H2018 amid trade war, STI selldown

SINGAPORE (July 19): Just the day before The Edge Singapore’s 2018 mid-year investment forum took