beleaguered cord-blood bank Cordlife : P8A 0% has provided reasons for its proposed private placement, in a bourse filing addressing shareholders’ concerns ahead of its May 14 annual general meeting (AGM).
The company’s operations in Singapore, though suspended by the Ministry of Health (MOH) since last December, continue to incur fixed running costs, said Cordlife during the midday market break on Friday (May 10). It added that it does not expect positive cash flow in Singapore until the suspension is lifted.
Given that more than half its cash and cash equivalents, as well as fixed deposits, are situated in India and Malaysia, the group said it does not want to compromise its overseas operations by diverting cash solely to address the needs of its operation in Singapore.
It added that as most of the cash collected in these two countries is from advance payments by clients based there, it is “prudent” to not exhaust the cash in those countries, “in order to maintain its ongoing obligations to these clients, as well as to ensure sufficient working capital for its ongoing operations”.
Additionally, transferring funds back to Singapore is subject to regulations in the respective jurisdictions, it added.
As at Dec 31, 2023, Cordlife had cash and cash equivalents of S$7.1 million, and fixed deposits of S$6.1 million.
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It announced on Apr 17 its proposal to raise S$8.2 million by issuing some 51.2 million new ordinary shares at S$0.16 apiece. Days after, one of two substantial shareholders in a boardroom tussle – Nanjing Xinjiekou Department Store – sought an injunction to cancel the proposed private placement.
An interim injunction to restrain the company from issuing new shares was granted by the High Court on Apr 19.
Cordlife on Friday said that at this juncture, it is unlikely the proposed private placement will be completed before its AGM. Nonetheless, if the placement were to take place before the meeting, subscribers would be able to vote on any of the resolutions tabled.
Responding to a query on why a rights issue was not offered to existing shareholders, Cordlife said that a private placement offers a shorter timeline, greater certainty and less cost to address its “urgent cash needs”. This is especially so as investors had reached out directly to the company.
Additionally, Cordlife highlighted that the MOH suspension and ongoing investigations, limited to its operations in Singapore, do not affect its overseas subsidiaries’ operations.
“The entities in the other markets outside of Singapore operate independently, with their own dedicated teams, and adhere to their respective local laws and regulations,” said the cord-blood bank.
Responding to the possibility of changing the name of Cordlife in Singapore, it said that its immediate focus is on its rectification efforts in Singapore to address the lapses identified by MOH.
“Nonetheless, it is carefully assessing its next steps and will consider all suitable options to strengthen its business,” it added.
As at 2.20 pm on Friday, shares of Cordlife were trading flat at S$0.126.
