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Cordlife on Monday (May 13) said that it intends to terminate the S$8.2 million private placement announced on Apr 17.
This comes after the High Court upheld an interim injunction that restrains the company from issuing new shares temporarily, and dismissed its appeal to overturn it.
Controlling shareholder Nanjing Xinjiekou Department Store, as well as non-independent non-executive directors Zhai Lingyun and Chen Xiaoling had filed an injunction application against the company, its acting chairman Ho Choon Hou, independent directors Yeo Hwee Tiong and Titus Cheong, non-independent non-executive directors Yiu Ming Yiu and Chow Wai Leong, and group chief executive Ivan Yiu (Yiu Pang Fai).
Pending a hearing on this application, an interim injunction was granted by the High Court on Apr 19. On Apr 25, the company filed an application to set aside the interim injunction, which was dismissed on May 10.
On Monday, the troubled cord blood bank said that the Ministry of Health (MOH) had issued it a notice highlighting the importance of having local directors ahead of its May 14 annual general meeting (AGM), which will decide whether three local directors would be replaced.
MOH said that Cordlife’s board should provide sufficient oversight and directions to its local management and laboratory operations teams. The new board should also respond expediently to the ministry’s queries and ensure business continuity while rectifying its lapses, the ministry added.
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As the new board should ensure a smooth and proper transition, particularly in relation to outstanding regulatory matters, a relevant factor – given the company’s present circumstances – would be whether the board members were present in Singapore, said MOH.
Addressing the MOH letter, acting chair Dr Ho Choon Hou said he and independent directors Titus Cheong and Yeo Hwee Tiong – who are all based in Singapore – have been overseeing the rectification and system improvements at Cordlife; they have also been involved in recruitment, following the departures of staff.
“The aim to strengthen the operational processes with tighter checks and automated systems is an ongoing process to ensure sustainable practices,” he said, adding that the trio “remain committed” to their roles, if they are legally obligated or permitted to do so after the AGM.
This comes as Nanjing Xinjiekou seeks to remove four directors – Dr Ho, Yeo, Cheong and Joseph Wong. Wong has said he will retire after the AGM.
The substantial shareholder also wants to appoint three new directors – Dr Teo Tong Kooi, Dr Xu Tianhong and Cai Yong – to replace the three Singapore-based directors, Dr Ho, Yeo and Cheong.
Last Friday, both Nanjing Xinjiekou and fellow substantial shareholder TransGlobal Real Estate Group specified their proposed board composition and laid out separate plans to address the company’s issues after the AGM.
In a statement on Monday, Nanjing Xinjiekou said it “fully supports MOH’s position that key appointment holders of Cordlife should have relevant skills and competencies in the medical field and be based in Singapore”.
Chen noted that the majority of the Cordlife’s board was local at the time of operational issues and lapses.
“This goes to show you that we need people with relevant skills and competencies to guide and supervise management, and being local should not be the only important criterion,” she said.
With its ongoing crisis and incumbent directors in control, Chen said it has been difficult to persuade relevant local professionals to join Cordlife’s board.
“We believe that once we have stabilised the board, we will be in a better position to woo some of the experienced Singapore-based professionals we have approached to help us to rehabilitate Cordlife, and to build on its achievements,” she added.
Nanjing Xinjiekou ‘failed to demonstrate commitment to Cordlife’: TransGlobal
After the two announcements, TransGlobal issued an open letter to shareholders ahead of the group’s May 14 AGM, stating it was “gravely concerned with the contents” of Nanjing Xinjiekou’s open letter on May 10.
TransGlobal said in the letter that Nanjing Xinjiekou’s nominee directors Zhai and Chen were not actively involved with MOH’s investigations, and only attended board meeting overseas.
Despite Dr Ho’s “repeated invitations” to meet Singapore Exchange and MOH, Chen has attended only one meeting with MOH; Zhai has not met either MOH or the Exchange.
TransGlobal also charged that the two directors lacked “any meaningful commitment” to Cordlife; Zhai was unable to attend the AGM in person because of business commitments.
As Zhai was chair of Shanghai-listed Nanjing Xinjiekou’s own board, TransGlobal said he “sets the tone and direction” for the company and its nominee directors. His refusal to attend therefore shows that Cordlife is not a priority, said TransGlobal.
The substantial shareholder also pointed to Zhai and Chen postponing their Commercial Affairs Department interviews as not showing willingness to cooperate with the authorities.
“We are highly concerned that the proposed directors (by Nanjing Xinjiekou) will adopt the same approach in relation to dealing with Cordlife’s Singapore matters,” it added.
As Nanjing Xinjiekou’s proposed directors are not based in Singapore, TransGlobal believes this “underscores Nanjing Xinjiekou’s lack of commitment to being on the ground… and making meaningful efforts to turn Cordlife around”.
They also highlighted that Nanjing Xinjiekou does not appear to have experience managing Singapore-listed companies or Singapore-based companies in the healthcare or health sciences sector, despite its claiming to have a “track record” that can turn Cordlife’s fortunes around.
The letter urged shareholders to vote against the resolutions tabled by Nanjing Xinjiekou.
Shares of closed 1.6 per cent higher at S$0.128 on Monday.
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