Yahoo Finance Facing insolvency with no rescuer in sight, Midas says likely to be liquidated
SINGAPORE (Apr 1): Midas Holdings, which entered into judicial management and is the target of a police probe after the discovery of financial irregularities in early 2018, warned shareholders the group will likely be liquidated when ordered to by the court.
This is because Midas is facing insolvency given its assets is not enough to cover its reported liabilities and prospect of rescue appears dim. The group also does not have funds to contest legal action by its creditors.
In filing to the Singapore Exchange on Monday, the supplier of aluminium train parts reported unaudited losses of about $653.6 million for the FY18 ended Dec primarily because its investments in Jilin Midas Aluminium Industries Co., Jilin Midas Light Alloy Co. and Dalian Huicheng Aluminium Co. had to be written off.
As at end Dec 2018, the group’s unaudited net liability position stood at $47.1 million. Net current liabilities stood at $81.1 million versus $4.1 million of current assets.
In addition, efforts to start a discussion with Hong Kong-listed CRRC Corp on rescuing the company have gone nowhere, added Midas. On Sept 26, 2018, court documents indicated that CRRC Corp was awarded the 12.44% stake that belonged to former executive chairman Chen Wei Ping. If transferred, the shares will make CRRC the single largest shareholder of Midas.
Meanwhile, many government agencies are pressing Midas to file annual returns, file tax returns and hold its AGM. However, in the absence of a rescue and dwindling funds, Midas said it will be unable to maintain its listing status at SGX and HKSE, its company secretaries and share registrar. Executive director Xu Wei Dong has also slapped the group with a statutory demand for unpaid salaries due to him.
“The current staffing of just two persons also make fulfilling the compliance obligations of the dual SGX and HKSE listed Midas challenging,” adds the group.
Last March, Midas’ independent directors lodged a police report with the the Singapore Police Force's Commercial Affairs Department. These were related to the possible breach of securities laws and other offences arising from the irregularities in the group’s operations in China including the discovery of loans and guarantees taken up by its subsidiaries which former CEO Patrick Chew Hwa Kwang (image) claimed to have no knowledge of, discrepancies in the group’s bank balances as well as the existence of secret bank accounts.
See: Midas CEO Patrick Chew quits; stamp was used without his approval to take out loans
See also: Midas says former exec chairman Chen Wei Ping under probe in China for fraud
See also: CAD launches investigations into Midas
See also: Midas audit committee lodges report with CAD over China ops; SGX RegCo looking into matter
