SINGAPORE – The stock of mainboard-listed Raffles Education (REC) was hammered to new lows on Monday as the market got hold of a letter by tycoon Oei Hong Leong to the company’s board.
The stock dived 26 per cent or 2.1 cents to close at 6.1 cents in the wake of a letter from Mr Oei asking why REC’s chief executive and founder Chew Hua Seng had hired “all members adult members of his family at high salaries.”
In fact, the stock has been under pressure for several months following the company’s disclosure that it was issued a writ by Affin Bank amounting to some RM$410 million on an unpaid loan.
But responding to SGX queries, the company said it was negotiating to settle the issue amicably with the bank, and was raising funds via sale of various properties in China and Singapore.
But brokers said the selldown was particularly vicous and came ahead of the company’s annual general meeting on October 30.
As a result, the company’s market cap was shaved by a hefty S$29 million to S$84 million on Monday. It was S$113 million last Friday.
The stock is now down 37 per cent this month, with almost S$50 million wiped off its market cap.
In the letter dated October 16, circulated widely through the market on Monday, Mr Oei referred to disclosures in the company’s latest annual report.
He asked why Mr Chew’s second wife Doris Chung Gim Lian received almost S$500,000 last year. Meanwhile, his two sons from his two marriages received S$200,000 each, and Mr Chew’s first wife’s daughter-in-law received S$100,000 from the company.
“These are just official family members,” the letter said. “This is in addition to the amount of almost S$5 million paid to Mr Chew himself for his salary, bonuses and profit-sharing.”
Mr Oei, who owns just over 10 per cent of REC, has been a vocal critic of Mr Chew and REC over the past three years following a dispute over an alleged share buyback agreement with Mr Chew which went sour. Mr Oei lost his legal suit against Mr Chew for settlement.
Mr Oei is expected to ask more questions pertaining to the company’s less than stellar performance and perceived corporate governance issues in the lead up to the AGM.Internet Explorer Channel Network