SGX RegCo directs Darco Water to provide detailed report on Gaoyi project deal

Water in a fountainWater in a fountain

Singapore Exchange Regulation (SGX RegCo) has directed Darco Water Technologies to disclose a detailed report on the status of the company’s proposed investment in the Gaoyi project, with inputs from legal advisors, by 17 September, according to a letter from the regulator filed to the exchange.

In 2018, Darco Water Tech said it signed a non-binding letter of intent with Wang Zhi for a proposed investment in a build-operate-transfer Gaoyi Domestic Waste Water Treatment Project with a 30-year concession, according to the letter Friday. Wang Zhi, who held his stake in the project via He Bei Kai Yuan Cheng He Water Engineering Co. (HKC), was to transfer his equity interest in the project to Darco Water, the letter said.

“Based on the company’s knowledge, which is subject to verification and due diligence, HKC signed a co-operation agreement with Wo De Si Yuan Group Co. Ltd., a PRC company that had successfully won the project in an open tender from the Gaoyi County Government back in December 2016,” SGX RegCo’s letter said.

SGX RegCo said based on Darco Water’s announcement so far, it isn’t clear what would be transferred to the company in relation to the Gaoyi project — the waste-water treatment project or the shareholding in HKC or the special purpose vehicle for the project, called HuiZe (Gaoyi) Sewage Treatment Co.

The letter noted a deposit of 6 million yuan has been paid to Wang Zhi and the deadline for the transfer of the water treatment asset to Darco Water has been extended to 23 March 2022; Binnies Singapore was appointed as an independent party to conduct due diligence in June, but legal due diligence hasn’t begun as Wang Zhi hasn’t provided additional information documents and data points, which were requested in May, the letter noted.

SGX RegCo said the detailed report needed to include the current ownership structure of the Gaoyi Project, including the shareholding interests of Wang Zhi, HKZ, HuiZe and others, details of the water treatment asset to be transferred to the company and the circumstances surrounding the deadline extension for the transfer.

Other information sought included the legal recourse available to the company and whether it will be proceeding with the proposed investment, the letter said.

Executive Director and CEO Poh Kok Hong submitted his resignation at end-August, with effective date of cessation at 28 February 2022, saying he had unresolved differences with the board of directors on material matters, including over the Gaoyi project. The company had responded with a rebuttal filed to SGX, saying the board would wait for more information on the Gaoyi project and that it had “acted prudently” on other matters, including the Nambo project and a whistleblower report.