Published March 13, 2009

Sino-Env bondholders refrain from redemption

For now, they are seeking information on group, chairman

By LYNETTE KHOO

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SINO-ENVIRONMENT Technology said that its convertible bondholders have agreed to refrain from seeking early redemptions until certain information they are seeking from the company is provided to them.

But the counter still nose-dived yesterday when it resumed trading, plummeting 73 per cent to eight cents. It was unclear if there was forced-selling by institutions or retail investors, dealers said. It could also be a case of pent-up selling pressure, said an observer.

Sino-Environment said yesterday that the group had held discussions with the bondholders on Tuesday. During the discussions, the bondholders requested certain information about the group and its majority shareholder and chairman Sun Jiangrong.

Last week, it was disclosed that Thumb (China) Holdings Group, the investment firm through which Mr Sun owns his Sino-Environment stake, had defaulted on certain financial obligations and his pledged shares could be force-sold.

He had pledged his shares and other personal assets to some hedge funds managed by Stark Investments (Hong Kong) Ltd, Singapore Branch Asia as securities for original notes worth $120 million. An outstanding $65 million became due on Feb 16.

Force-selling of Mr Sun's shares may result in a change in control of the group, which can trigger early conversion or redemption of the $149 million worth of CBs, and crystallise defaults on a corresponding swap arrangement. Some of Mr Sun's pledged shares were transfered out of his account to Bank of New York Mellon, the security-trustee of the hedge funds on Tuesday, which cut his stake in the group to 51.23 per cent from 56.29 per cent. A filing yesterday confirmed that Stark has emerged a substantial shareholder with a deemed stake of 5.057 per cent resulting from this transfer.

Meanwhile, the sharp fall in Sunshine Holdings yesterday, down 33.3 per cent to one cent on active volumes of 35.15 million shares drew a query from the SGX on the trading activity.

In response, Sunshine said it has completed the disposal of three subsidiaries Henan Zhong Cheng Jia Sheng Property Management Co, Henan Ding Sheng Real Estate Co and Beijing Chengguo Hotel Management Co.

But these transactions are not deemed to be material and the company is of the view that they are not the cause of the trading activity yesterday, it added.

The group has also started talks with a third party on various options to improve its business, which include collaborations to jointly develop projects and restructuring of assets.