Sen Yue unit receives another letter of demand from SP Group

SP PowerAssets has sent a second letter of demand to waste management firm Sen Yue Holdings' wholly-owned subsidiary SMC Industrial (SMCI).

This time, the SP Group subsidiary is seeking the payment of an aggregate balance outstanding sum of close to S$7.5 million and any accrued interest for late payment of this amount, Sen Yue said in an exchange filing on Tuesday.

The latest letter was dated Oct 2 and received by SMCI on Oct 5. SMCI provides industrial waste solutions in Asia, with a niche in electronic-waste management and recycling solutions.

SP PowerAssets expects SMCI to repay immediately the total outstanding sum, which includes any accrued interest, or else it may take necessary steps to recover the amount.

Sen Yue on Tuesday said it is in talks with the utility services firm on the repayment proposals for the outstanding amounts.

The Catalist-listed company added that it will provide further updates when there are material developments.

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Last week, SMCI received a letter of demand dated Sept 29 for nearly S$7.9 million it owed to SP PowerAssets when it purchased scrap cable from the latter.

In that first letter, SP Group said it expected SMCI to repay the S$7.9 million outstanding sum by Oct 2. Otherwise, SP Group reserved the right to commence legal proceedings against SMCI to recover the amount, including legal costs and disbursements incurred.

Separately, SMCI's principal lenders - DBS and HSBC - have requested SMCI offset its fixed deposits against outstanding past due invoice-financing balances, Sen Yue said in its filing last Thursday.

As at Aug 31, SMCI had pledged a S$7.1 million fixed deposit to DBS for S$21.4 million in outstanding invoice-financing loans, and a S$3 million deposit to HSBC for S$7.2 million in such loans. These loans are secured against multiple assets and/or guarantees, including the fixed deposits.

Sen Yue in July disclosed that SMCI had breached bank loan covenants, which prompted DBS to request a review of the subsidiary's finances and business. RSM Corporate Advisory was then appointed, at DBS's request, as the special accountant to carry out the SMCI review.

Sen Yue said last Thursday that it was in discussions with DBS, HSBC and SP PowerAssets on repayment proposals for the outstanding sums.

Sen Yue called for a trading halt in April, before converting it to a suspension in May. Its shares last traded at 2.2 Singapore cents on April 27.