Published March 27, 2009

Bondholders query Sino-Environment

Company says terms between CEO and hedge fund confidential

By CONRAD TAN

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SINO-ENVIRONMENT Technology Group has said that the terms of the financing agreements between its biggest shareholder and a hedge-fund manager threatening to force-sell its shares are confidential and cannot be disclosed.

In an announcement last night listing responses to bondholders' queries, Sino-Environment said that Stark Investments (Hong Kong), the hedge-fund manager, has insisted on the confidentiality agreement and objects to the company disclosing details of the arrangement to its bondholders.

On the request for details on executive chairman and chief executive officer Sun Jiangrong's liquid assets, the response was a two-word answer: 'personal information'.

The responses were from the company and the adviser of Mr Sun, Sino-Environment said, adding: 'The company has not verified the information provided by Mr Sun's adviser and accept no responsibility for the information provided whatsoever.'

On March 5, it stunned the market when it said that Thumb (China) Holdings Group, an investment vehicle of Mr Sun that owned a 56.29 per cent stake in the firm, had defaulted on certain financial obligations to hedge funds managed by Stark and that enforcement action could include the forced sale of some or all of Sino-Environment shares held by the vehicle.

Sino-Environment also warned then that any change in control of the company if the shares were forcibly sold could trigger bondholders' rights to convert or redeem S$149 million worth of bonds issued by the company, raising doubts about its ability to continue as a going concern.

Yesterday, the responses said that 'various options are being pursued' with Stark and other investors to resolve Mr Sun's difficulties and that 'discussion is ongoing'.

Mr Sun's stake in the firm has already been reduced to 51.23 per cent, after some 17.1 million of his shares were transferred to Stark on March 10.

Based on the information available, 'Stark has yet to take possession of the remaining shares', the responses said yesterday.

On the group's cash position, the responses said that it had some 300 million yuan (S$66.2 million) in cash as at March 6, mostly earmarked for capital expenditure and working capital.