Sunvic Chemical’s wholly owned subsidiary Jiangsu Jurong Chemical has received letters of demand for outstanding loans totaling 166.1 million yuan (S$32.18 million), with the potential for a “material and adverse impact” on the company, the China-based company said Wednesday.
The company plans to repay the loans with money from wholly owned subsidiary Taixing Jurong Chemical’s disposal of a 45 percent stake in Taixing Sunke Chemicals, Sunvic Chemical said in a filing to SGX. Those funds are being held in escrow accounts, the filing said.
The letters of demand sent to Jiangsu Jurong were from China Construction Bank Corp. Xiangshui Branch (CCBC), Agricultural Bank of China Xiangshui Branch (ABOC), while Taixing Jurong received a letter of demand from ICBC Taixing Branch, the filing said.
“In the event any of the banks mentioned above commences legal proceedings against any of the company’s subsidiaries as described above and the company is not able to obtain the approval to timely repay the banks with the monies in the escrow accounts, this will have a material and adverse impact on the financial position, business and operations of the group,” Sunvic Chemical said in the statement.
The total transfer price for the Taixing Sunke Chemicals stake was 875.41 million yuan, made in three installments; the first two installments have been transferred from the escrow accounts to Taixing Sunke, with the third installment of 377.08 million yuan remaining in the account, Sunvic Chemical said in September.
Those funds were to remain in the escrow accounts “for the time being,” with any withdrawal conditional upon directions from SGX, the September filing said.