Sunvic Chemical racks up $44 mil in corporate loan claims, says cash flow may be affected

Sunvic Chemical racks up $44 mil in corporate loan claims, says cash flow may be affected

By: 
Michelle Zhu
11/01/19, 12:25 pm

SINGAPORE (Jan 11): Sunvic Chemical Holdings says two of its subsidiaries, Yixing Yinyan Import & Export Co and Jiangsu Jurong Chemical, have each received letters of demand regarding corporate loans amounting to about RMB 222.5 million ($44.3 million).

The first claim was lodged by Yixing City Futao Rural Micro Credit against Sunvic’s Yixing Yinyan, which acted as the corporate guarantor for Jiangsu Donglai Real Estate Development for an RMB 180 million loan from Yixing City Futao.

On top of the principal loan repayment, the creditor is also seeking to claim an additional 37 million yuan in accrued interest from Yixing Yinyan.

Jiangsu Donglai is currently negotiating with the creditor to “achieve an amicable resolution” to this matter, according to Sunvic in its filing to the SGX on Thursday.  

Another claim is from the Xiangshui County sub-branch of Bank of China (BOC) regarding its RMB42.5 million loan to Jiangsu Dahe Lvjian Chemical, which Jiangsu Jurong Chemical signed a corporate guarantee for.

On this, Sunvic notes that its subsidiary’s corporate guarantee came as part of an arrangement with Jiangsu Dahe since 2011, where both Jiangsu Jurong and Jiangsu Dahe agreed to each provide corporate guarantees up to the loan amount of RMB 200 million to facilitate the securing of each others’ loans.

The group highlights that the amount guaranteed under this particular arrangement has been reduced over the years, and represents only the outstanding guarantee provided by Jiangsu Jurong for Jiangsu Dahe.

Further, Sunvic says the BOC loan as also secured by eight other corporate and personal guarantees by other unrelated guarantors. Those related to Jiangsu Dahe have expressed their willingness to repay BOC’s claim amount, adds the group.

Should either or both of these corporate guarantees be enforced against Sunvic’s subsidiaries by their respective creditors, the group says it will be unable to make payment for the claim amounts without having to realise its assets, given its current financial resources.

As at end-Sept 2018, Sunvic’s cash and bank balances and unaudited net tangible assets (NTA) are approximately RMB54.1 million and RMB856.9 million, respectively.

Both letters of demand received may also be regarded as an event of default under the Sunvic’s existing banking facilities in China, which would eventually result in an adverse material impact on the group’s cash flow.

Shares in Sunvic last traded at 2.2 cents on Jan 4. 

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