Oei Hong Leong sells down Raffles Education stake, ceasing to be a substantial shareholder

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After a long-running war of words with Raffles Education‘s management, Oei Hong Leong sold 56.2 million shares of the company for S$3.46 million in a market transaction Monday, ceasing to be a substantial shareholder.

Oei’s total interest in the company fell to 0.78 percent from 7.34 percent previously, according to a filing to SGX Tuesday.

Around 34.27 million of the disposed shares were held by Oei Hong Leong Art Museum, which Oei is deemed interested in, the filing said.

Raffles Education shares ended Tuesday down 6.35 percent at S$0.059.

Oei has launched salvos at Raffles Education via a series of open letters to the company, criticizing accounting treatments and Chairman and CEO Chew Hua Seng’s hiring of family members.

Raffles Education has denied Oei’s allegations, calling them without evidence, baseless and misleading.

In a response to Oei in a filing to SGX Sunday, the company said: “We again urge you to allow the board to focus on managing the company’s business in these difficult times and returning value to the shareholders, rather than having to constantly deal with your repeated attacks.”

On Tuesday, in response to queries from SGX, Raffles Education clarified details of one of Oei’s concerns: CEO Chew’s personal loans to the company.

The total value of the interested person transactions with Chew for the previous financial year were S$9.53 million in loans to the group, Raffles Education said in its responses, filed to SGX.

Around S$1.20 million of the loan was used by the company for working capital in Singapore dollars, while S$8.33 million went to Wanbo Institute of Science & Technology, in yuan, for the construction of its new campus in Xin Qiao, Hefei, in China, the filing said.

At the end of the previous financial year, Raffles Education said the outstanding loan balance owed to Chew was S$10.92 million; the company has previously said the loans were interest-free.

Even before Oei began selling off his shares, Raffles Education’s stock had already been under pressure, as earlier this month, its independent auditor, BDO LLP, had cited the financial statements for the fiscal year ended 30 June for a material uncertainty over whether the company can continue as a going concern. As of end-June, the group’s and the company’s current liabilities exceeded current assets by S$196.4 million and S$96.8 million, respectively, the auditor noted.

In addition, last week, Raffles Education announced it had received a joint order from the Monetary Authority of Singapore (MAS) and the Commercial Affairs Department (CAD) of the Singapore Police Force requiring the company to provide documents for an investigation of a possible offence under the Securities and Futures Act. The documents related to loan facilities from Affin Bank to Raffles K12 Sdn. Bhd. and Raffles Iskandar Sdn. Bhd., Raffles Education had said.