THE Singapore Exchange Securities Trading (SGX-ST) has rejected New Silkroutes Group’s proposal to resume trading over concerns about the group’s financial stability and the viability of its new business.
The mainboard-listed group, which had submitted its proposal in June, received the rejection from SGX-ST on Wednesday (Sep 11). The group has been suspended from trading since November 2021.
In a bourse filing on Thursday, New Silkroutes said that SGX-ST had cited several reasons to reject the resumption proposal.
SGX-ST had noted that the group, which recently entered China’s transport industry, will remain in a net current liability position as at Dec 31, 2023, based on the group’s pro-forma financial statements as at the same date.
The company is also projected to generate a net cash outflow of S$3.3 million during May 2024 to April 2025.
The company’s external auditor had also issued a disclaimer opinion on the group’s financial statements for the financial year ended Jun 30, 2023. The disclaimer opinion was, among other things, in relation to the group’s financial stability going forward and its opening balances and comparative information.
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Furthermore, the group had failed to submit an independent review report by its auditors on its pro-forma financial statements, cash-flow projections and half-year financial projections.
Its projected half-year continued profitability is dependent on the completion of upgrading works for its newly acquired China unit, Hequ Yuanyang Industrial, over the next three years.
However, SGX-ST noted that the group has not “adequately demonstrated” how it will be able to fund upgrading works amounting up to S$19.2 million, given that it has only S$2.7 million unutilised under the debtor-in-possession financing facility.
New Silkroutes had also submitted its trading resumption proposal past the deadline.
The group is required to re-submit a revised trading resumption proposal by Dec 31, 2024.
The proposal should include, among other things, audited financial statements for the financial year ended Jun 30, 2024; the convening of its annual general meeting by the end of this year; and a demonstration that the group has secured sufficient financing to fund its upgrades.
If the group does not meet these milestones, SGX-ST will delist the company.
New Silkroutes said that it is assessing its next steps.
Shares in New Silkroutes Group last traded at S$0.075 on Nov 15, 2021.
