SINGAPORE (THE BUSINESS TIMES) – ecoWise said in a filing on the Singapore Exchange (SGX) on Wednesday (March 16) that requests for repayments of overdue amounts by several banks and an inability to pay the security deposit to extend its lease indicate “material uncertainty” of the company’s ability to continue operating.
The filing was in response to queries from SGX on the board’s assessment of the company’s ability to continue operating as a going concern.
The environmental solutions provider had announced through a series of filings, after the release of its financial results on March 1 this year, that several banks in Malaysia had been chasing ecoWise for payment.
MayBank, Al Rajhi Bank and Affin Bank had sent letters of demand or reminders to ecoWise’s subsidiaries requesting payments totalling more than RM3 million (S$974,927) that are overdue.
In its latest update on Wednesday (March 16), the embattled company said that Public Bank had sent three letters of reminder over the past month over instalments that amounted to RM11,524 that were due last month.
Affin Bank had also sent a reminder letter to the company to pay RM89,000 that was due by Feb 28, and another bill totalling RM2.7 million which will mature this month and next month. The bank has stopped any further use of ecoWise’s trade finance facility until the overdue amount has been repaid.
The company also said that Al Rajhi Bank has agreed to extend the deadline for it to pay an outstanding amount of RM407,841.10 to March 18.
“The group is in discussions with the financial institutions and will update shareholders as and when there are material developments on this matter. The group will also explore other measures to manage the current cash flow situation of the group and ensure the sustainability of the group’s business,” read the filing.
ecoWise also said that its board has invited external professional firms to help the company negotiate with banks and assess the longer-term viability of various aspects of its business.
SGX had also asked ecoWise for more details on its inability to pay a security deposit of $691,200 to the National Environment Agency (NEA) for extending its existing lease on a property.
ecoWise had first notified SGX, in a filing on March 3, that the security deposit had not been paid to NEA even though the lease renewal was signed on Nov 17 last year.
In its response to these queries on Wednesday, the company said that the lease is for its recycling plant located at a site in Sarimbun Recycling Park in Lim Chu Kang. NEA and ecoWise agreed to extend the lease by another 17 months from Jan 15 this year, and a security deposit equivalent to 36 months had to be paid to NEA.
ecoWise has been using this recycling plant to recycle horticultural and wood waste generated within Singapore for more than 10 years.
However, the company said it is unable to make the payment due to its current financial position.
NEA has agreed to extend the deadline for the company to pay the security deposit to March 28 this year, and Ecowise is discussing with an insurance broker that could help them secure an insurance company to pay the security deposit in the form of an insurance performance bond to NEA.
When asked how Ecowise’s business operations would be affected if it is unable to make payment, it said in the Wednesday filing that the company would have to find alternative sources of raw materials for its renewable energy business, which will increase its cost of operations, as the raw materials are currently sourced from this recycling plant.
“If the group is not able to procure such alternative sources of raw materials, it will not be able to fulfil its contracts with its customers and may be subject to penalties from these customers,” read the filing.
Shares of Ecowise are currently suspended from trading.
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MCI (P) 031/10/2021, MCI (P) 032/10/2021. Published by SPH Media Limited, Co. Regn. No. 202120748H. Copyright © 2021 SPH Media Limited. All rights reserved.