A SOUTH KOREAN steelmaker that controls a kimchi lactobacillus (lactic acid bacteria) biotech firm is trying again to secure a listing in Singapore for the latter, via the judicial management process of existing listed firms.
Stainless steel manufacturer Kossen – a key shareholder of BiogenicsKorea – has signed an implementation agreement with former Apple-authorised retailer Epicentre Holdings and Tardis Capital, the judicial managers (JMs) of Epicentre said on Wednesday evening.
Under the agreement, Epicentre proposed to transfer its listing status on the Singapore Exchange’s Catalist board for S$3 million to an unnamed entity that will be incorporated in Singapore, with KOSDAQ-listed Kossen’s support. Such deals can be considered a form of backdoor listing.
Tardis Capital, a Singapore-based mergers and acquisitions advisory firm, had introduced Kossen and the transferee to the JMs.
The unnamed transferee is involved in the business of manufacturing, wholesale and retail of lactobacillus health products, according to the Epicentre filing.
Kossen will procure the transferee’s incorporation in Singapore, and later ensure that the transferee will own all shares of BiogenicsKorea.
Seoul-based BiogenicsKorea’s website states that the biotech firm makes lactobacillus from kimchi, or Korean fermented vegetables.
This is not the first time Kossen and Biogenics have surfaced in a potential transfer of listing status.
Just five months ago, 8Telecom inked a memorandum of understanding (MOU) with the steelmaker to transfer its listing status to BiogenicsKorea. Tardis Capital was also the introducer for this proposed transaction, and was the adviser to both Korean firms.
The mainboard-listed telecom infrastructure group, which is still under judicial management, in March updated that the MOU’s validity had been extended to April 10 “due to unforeseen circumstances caused by the Covid-19 pandemic, resulting in delays in implementation”.
However, Tardis Capital’s managing director Rohit Sen told The Business Times (BT) on Thursday that the MOU had lapsed as the parties did not sign an implementation agreement.
Bloomberg data showed that Kossen has been loss-making in recent years, sinking deeper into the red in 2019 with a net income loss of 56.8 billion won (S$65.7 million), compared to a 10.3 billion won loss in 2018.
According to Kossen’s website, the company manufactures and sells stainless steel pipes and tubes. It also has a natural-gas vehicle business with engineering and conversion services, as well as a solar power business.
In response to BT’s queries, corporate governance advocate Mak Yuen Teen on Thursday said he believes the Singapore Exchange (SGX) “should review carefully” the proposed transfer of Epicentre’s listing status and other similar backdoor listings.
While such deals allow the shareholders of the existing Singapore-listed firms to monetise the shell companies, “what gets injected in may not be good for the market”, said Prof Mak, an academic at NUS Business School.
He also questioned why a South Korean firm like BiogenicsKorea would be keen to list in Singapore, instead of in its home market.
Epicentre was placed under judicial management late last year, after creditor Goh Chee Hong filed an application and claimed a S$3 million sum arising from a loan he had provided to the company.
In December, Epicentre’s former acting chief executive officer and executive chairman Kenneth Lim was reported to be facing a bankruptcy petition for a judgment debt of more than half a million dollars.
As for 8Telecom, it was served with an originating summons taken by Top Capital Securities in March 2019 to put the mainboard-listed company into judicial management, for failing to repay about S$1.7 million in share subscription consideration.
8Telecom was placed under judicial management in November 2019, with Deloitte & Touche’s Andrew Grimmett and Lim Loo Khoon named as its JMs. The judicial management order has been extended till Nov 16, 2020, according to 8Telecom’s filing on June 25, 2020.