SINGAPORE (June 7): Investment holding company Innopac Holdings has received a letter of demand from Saxo Bank.

In a June 1 letter of demand from law firm Rajah & Tann Singapore, Saxo Bank is seeking a payment of approximately $14.7 million from Innopac to settle the negative account balances under the accounts maintained by its subsidiaries, Heritage Investment Corporation and Wang Da Investment.

Although the negative account balances were incurred by the subsidiaries without any guarantee by the company, Saxo Bank is alleging Innopac is liable for the claim based on a Memorandum of Understanding signed on Dec 24 2013.

No legal proceedings have been commenced by Saxo against the company at this stage though, said Innopac in a filing made on Wednesday night which was signed off by Chairman and CEO Wong Chin Yong.

In consultation with its solicitors, Innopac said will be evaluating the basis and merits of the claim and will take appropriate action accordingly.

Pending resolution of the claim, the board said the company is unable to reasonably assess and inform the market of its financial position and will be requesting for trading of its shares to be suspended.

Innopac reported a pre-tax loss of $2.23 million for the fiscal year ended Dec 2017. It had a negative working capital of $11.4 million as at end Dec 2017.

On May 30, Innopac announced a placement of 5 billion new shares at 0.1 cent each to raise as much as $5 million. Out of the net proceeds, $2.25 million will be used to support new business investments and acquisitions.

On April 13, Innopac was issued with a notice of compliance by the Singapore Exchange to appoint a professional firm to review the group's investment processes and to recommend improvements in governance controls.

In January, SGX suggested the company should be suspended under listing rules as it was a cash company without a core business. However, Innopac denied it was a shell, claiming it has other investments in properties, joint ventures and available-for-sale investments.

Interestingly, Innopac CEO Wong's name was mentioned in a Singapore court on May 31 during the committal hearing related to the 2013 penny stock crash.

Back in Oct 2, 2013, Goldman Sachs had made margin calls on four accounts allegedly controlled by former IPCO CEO Quah Su Ling who will be facing trial for her role in the crash.

While Quah owned one of the accounts, the other three were individually owned by former LionGold director Ng Su Ling, former Blumont executive director James Hong, and Wong.

Shares in Innopac last traded at 0.2 cent.