Cordlife substantial shareholders lay out separate plans to address issues after AGM

THE two substantial shareholders in Cordlife’s boardroom tussle have set out separate plans to address the cord-blood bank’s troubles following the May 14 annual general meeting (AGM).

Cordlife made a bourse filing on Friday (May 10), reporting what each shareholder has said it would do. The troubled cord-blood bank was responding to queries by the Singapore Exchange (SGX), which had asked what the resultant board would do to resolve the company’s ongoing issues if the resolutions in the two shareholders’ respective requisition notices are passed.

Cordlife substantial shareholder Nanjing Xinjiekou Department Store has filed resolutions to remove four directors: acting chairman Ho Choon Hou and independent directors Yeo Hwee Tiong, Titus Cheong and Joseph Wong. (Wong has separately announced his departure from the board on May 14.)

Nanjing Xinjiekou also seeks 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.

Cordlife’s other controlling shareholder, TransGlobal Real Estate Group, has requisitioned to remove one director, Zhai Lingyun, in a separate notice.

The boardroom dispute is playing out in the wake of Singapore’s Ministry of Health uncovering lapses in Cordlife’s storage of cord blood samples. The ministry suspended the cord-blood bank from collecting or processing new cord blood for six months, starting last December, as a result.

SGX, noting that the company has not explained how the resultant board will ensure continuity, and how it would work with the relevant authorities to resolve the current issues in its May 6 response, asked for clarity on how these would be ironed out.

Nanjing Xinjiekou Department Store

In its response to SGX, Cordlife reported that, assuming all resolutions in Nanjing Xinjiekou’s resolutions are carried at the upcoming AGM, the new board will comprise the following directors:

1. Zhai Lingyun (non-independent, non-executive director)

2. Chen Xiaoling (non-independent, non-executive director)

3. Yiu Ming Yiu (non-independent, non-executive director)

4. Chow Wai Leong (non-independent, non-executive director)

5. Dr Teo Tong Kooi (independent and non-executive director)

6. Dr Xu Tianhong (independent and non-executive director)

7. Cai Yong (independent and non-executive director)

Zhai and Chen, as directors nominated by Nanjing Xinjiekou, proposed to reconstitute the following committees of the resultant board: the audit and risk committee, the nominating committee, the remuneration committee and the committee of inquiry.

A proposal has also been made to make arrangements for existing director Chen to remain in Singapore for at least the next few months to provide support and facilitate a smooth handover of board matters to the newly appointed directors.

Chen and Teo said they would work with the Singapore regulators, including SGX RegCo and MOH, as well as the cord-blood bank’s customers, to address ongoing concerns in Singapore.

Among other recommendations on corporate governance, Nanjing Xinjiekou Department Store is also recommending the appointment of additional directors and a new group chief executive officer, as well as engagement with third-party professionals.

On the operational front, this substantial shareholder proposes to transfer its existing resources and manpower overseas, including the laboratory and technical experts from China, the US and Hong Kong, to Cordlife.

“This is aimed at enhancing the technical processes and introducing industry best practices to Cordlife’s operations, thereby giving further assurance to MOH and existing customers of Cordlife,” it added.

Nanjing Xinjiekou holds around 20.3 per cent of Cordlife, according to Cordlife’s 2023 annual report. Together with its affiliate, China Stem Cells (East) Company, it holds 30.2 per cent. 

TransGlobal Real Estate Group

Cordlife told SGX that If only the resolutions in the TransGlobal’s resolution notice are carried at the AGM, the new board will comprise the following directors:

1. Chen Xiaoling (non-independent, non-executive director)

2. Yiu Ming Yiu (non-independent, non-executive director)

3. Chow Wai Leong (non-independent, non-executive director)

4. Dr Ho Choon Hou (acting chairman and non-independent, non-executive director)

5. Yeo Hwee Tiong (independent director)

6. Cheong Tuck Yan Titus Jim (independent director)

Dr Ho, Yeo and Cheong, who are on Nanjing Xinjiekou’s list of directors to be replaced, said that they are actively managing Cordlife’s ongoing issues with “genuine concern and care for the company”.

They stressed that it is important that they stay on, because they know about the issues raised by the lapses in the storage of cord-blood units, have been involved in the rectification, and are clear about what needs to be done to turn the company around, among other reasons.

They added that their being based in Singapore means they can tap the strong networks of relationships they have with relevant parties in the Republic.

While Nanjing Xinjiekou said in a letter to shareholder on Thursday that it was “perplexed” by Cordlife’s proposal to raise S$8.1 million through a private placement of shares, the three Singapore-based directors, as well as Chen, Yiu and Chow, said they believe the new capital is needed for the company to fulfil its obligations to local clients and operations, without compromising operations in other countries. This includes giving refunds to affected parents.

TransGlobal said: “The TransGlobal resultant board will continue to work with the management on addressing the potential claims by the affected parents, including issuing partial refunds where appropriate, and strengthening its laboratory operations to ensure that the licensed laboratories in each country are self-sufficient, so that the company’s operational and technical assistance can be shared across the countries in which the group operates.”

With KPMG having given notice on Apr 25 to quit as Cordlife’s external auditor, Cheong and group chief financial officer Thet Hnin Yi have been looking for another auditor.

The six individuals named on TransGlobal’s list of the resultant board, including the three local directors, Dr Ho, Yeo and Cheong, said that since Cordlife’s suspension last December, the company has not generated any new revenue or cashflow from the collecting new cord-blood samples, and that the company was uncertain of the business outlook in Singapore even after the lifting of the suspension.

“The company does not wish to compromise the operations or regulatory obligations of the group’s entities in the other regions simply to address the Singapore entity’s immediate needs for cashflow,” they said, stressing that most of the contracts in the other regions feature upfront payment from clients.

TransGlobal, as one of Cordlife’s controlling shareholders, holds a 27.9 per cent stake in the company.

As at 10.18 am on Friday, shares of Cordlife : P8A 0%were trading flat at S$0.126.