Business Times - 23 Sep 2010


TTI, dissenting creditors shore up support

Letters sent out to back their cause ahead of tomorrow's re-vote

By TEH SHI NING

(SINGAPORE) A flurry of letters continues between those for and against TT International's debt restructuring scheme, as both sides try to drum up support ahead of tomorrow morning's re-vote.

The outcome will determine whether the scheme goes before the Court of Appeal, which then has the final say on legal sanction of the creditor's scheme.

Five creditors including Ho Lee Construction and OCBC Bank had opposed the scheme in the initial vote, but the High Court granted it approval in March. OCBC and Ho Lee then fought their way to the Court of Appeal, arguing that the scheme lacked fairness and transparency.

Setting aside the earlier sanction, the Court of Appeal ordered a re-vote, an auditor's report on related companies' debt and directed scheme manager nTan Corporate Advisory to choose between acting for TTI or its founders Julia Tong and husband Sng Sze Hiang, to eliminate conflict of interest.

Since last week, TTI and three dissenting creditors - OCBC, Ho Lee and DZ Bank - have sent out letters persuading fellow creditors to take their side. The scheme needs the backing of creditors holding more than 75 per cent of total debt eligible, which now ranges between $320 million and $360 million depending on the court's calculation of Ho Lee's claims for loss of future profit. Unless one or more of the three changes stance, the re-vote may not succeed.

In the latest of these letters, TTI yesterday told all 97 creditors that the 'new tune that Ho Lee is singing' with its willingness to 'find a compromise' was 'intended to disguise its true intentions'.

But Ho Lee managing director Benjamin Tan told BT: 'Although TTI has responded twice in writing, in both responses they did not answer any of the questions and issues raised nor provided the information creditors have asked for.'

This includes requests for clarification over the proposed Boustead transaction, which Ms Tong in a reply last Friday dismissed as 'frivolous', claiming Ho Lee's letter was 'unfair and misleading'. Ho Lee's Mr Tan had earlier written that his firm had 'no faith' in TTI's management, nTan and the proposed deal with Boustead, and intends to apply for TTI to be placed under judicial management or in liquidation.

Both sides also disagree on the implications of the KPMG report on TTI subsidiary Akira's debts, submitted to the Court of Appeal. Ms Tong said that the report 'found no fault with the admission of the proof of debt by Akira' but Ho Lee maintains that 'now even more strongly because of the contents of the Akira Report' that it has no faith in the scheme manager and TTI management.

Separately, Ms Tong and Mr Sng addressed a letter to OCBC chief executive David Conner on Tuesday. Pleading that the bank rethink its stance on behalf of TTI's other creditors, shareholders, medium term noteholders and consumers holding product warranties, the couple asked for a 'compassionate and commercial decision', adding that they 'cannot see the commercial sense in (OCBC's stance)'.

Previous letters sent by OCBC to creditors and to the press stressed that it 'has never been its intention to wind up the company, and its primary objective has been to seek a debt restructuring plan which is commercially acceptable to all shareholders'.

Also on Tuesday, DZ Bank (owed $25.7 million) joined OCBC (owed $22 million) and Ho Lee (now claiming $56 million) in making public its opposition. But like OCBC, it is prepared to explore a new restructuring scheme.

TTI says that this is not feasible. 'There is simply no appetite among the company and the majority of the scheme creditors nor time left for another scheme to be negotiated and agreed with the creditors,' Ms Tong wrote in yesterday's letter to Ho Lee.

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