Raffles Education stock collapses after tycoon Oei Hong Leong’s letter calls into question high management salaries
Singapore – Following a letter from Singaporean billionaire Oei Hong Leong to the board of directors of Raffles Education Corporation (REC), the company’s shares fell 26%.
In his letter, which the market picked up, Mr. Oei wondered why the CEO and founder of REC, Chew Hua Seng, employed “high-paid adult members of his family” in the company.
REC shares fell 2.1 cents and closed at 6.1 cents on Monday (October 18).
It was reported that the company’s shares were already under pressure after independent auditor BDO LLP cited financial statements for the year ended June 30 last week, highlighting uncertainty over the company’s sustainability.
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According to the auditor, the company’s current assets stood at S $ 96.8 million while the liabilities stood at S $ 196.4 million, said The times of the straits.
REC is also facing a subpoena from Affin Bank for an unpaid loan totaling approximately RM 410 million (S $ 132.9 million).
Meanwhile, REC told the Singapore Stock Exchange that it is negotiating with the bank to settle out of court. The company is also in the process of liquidation through the sale of properties in China and Singapore.
The decision to sell was deemed particularly vicious by brokers, noting that it was made ahead of the company’s annual general meeting scheduled for October 30.
Mr. Oei’s letter highlighted disclosures in the company’s latest annual report, regarding the company’s cash received by Mr. Chew’s second wife, Mrs. Doris Chung Gim Lian, her two sons and the step-in-law. daughter of his first wife.
“They are only official family members,” the letter said. It also included the amount of Mr. Chew’s salary, bonuses and profit sharing.
As a result, REC’s market cap lost S $ 29 million and closed at S $ 84 million on Monday from S $ 113 million last Friday.
Mr. Oei has openly criticized Mr. Chew and REC over the past three years after losing a lawsuit against Mr. Chew for settlement.
In 2019, Mr. Chew wrote a handwritten note promising to find a buyer for Mr. Oei’s REC shares, which are just over 10%, at 44 cents per share within a month.
After shaking the deal, Mr. Oei sued Mr. Chew for allegedly reneging on his promise.
“A man’s word is his bond. A gentleman’s handshake is worth infinitely more than any signature. But not for the accused, ”said lawyers for Mr. Oei, lead lawyer Davinder Singh and Mr. Jaikanth Shankar.
Mr. Oei has claimed damages ranging from S $ 15 million to S $ 26.5 million, depending on the calculation approach.
However, a High Court judge said the note was not a legally binding agreement.
In response to the recent letter, REC said it contained “mere allegations and material inaccuracies which are not substantiated”.
The REC said he would respond in due course, while Oei would present more questions regarding his governance issues and less than remarkable performance. / TISG
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