Date: January 10, 2005
Today, the CAO Taskforce, led by Mdm Gu, together with its legal and financial advisors met with me again to brief SIAS on the progress made to-date on the restructuring plan. The Task Force believes strongly that a successful restructuring plan is a win-win situation for all concerned. It fully sympathizes with minority shareholders but hopes that CAO’s serious efforts to come up with a restructuring plan will not be hampered by any legal suits against the company. SIAS believes that allowing CAO to proceed with its current efforts to restructure the company, if successful, will bring value to shareholders.
Since meeting with SIAS on 18 December 2004, the Taskforce has come up with a draft framework for a restructuring plan. It is now actively discussing its draft framework with creditors. It is also in discussion with its parent company in Beijing, CAOHC. The Taskforce expressed its concerns about the class action as it believes that it will be difficult for the parent company to support the restructuring if the class action proceeds.
The Task Force also confirmed that CAO has no assets in the United States. Further, SIAS’ legal advisers have also confirmed that a US judgment cannot be enforced in Singapore. As such, SIAS is of the view that CAO minority shareholders, therefore should seek legal advice on whether such a course of action in USA will be beneficial to them.
SIAS has no locus standii to sue as it is not a shareholder. CAO shareholders who met with Mr Harish Kumar, Senior lawyer with Engelin Teh Practice, at the recent SIAS forum held on 20th December 2004, learnt of the difficulties they may face in suing CAO at this juncture.
SIAS is not against legal action and will assist its members if the advice is that legal action is the best in the circumstances. However, we do not think it is the prudent course to take at this moment when CAO is in the process of restructuring. SIAS legal advisors have also confirmed that it is not possible to enforce any judgment obtained in United States on the local company. Also the net worth of the company is minus US$600 million. SIAS is of the view that all minority shareholders should put on hold any legal action against the Company until it completes its work with the creditors and the investor.
SIAS will continue to monitor the progress of the restructuring efforts by the Task Force.
Mr David Gerald J.
President & CEO
Securities Investors Association (Singapore)
