Banks call in $75m loans to bag firm
Bank creditors of beleaguered Wealthmark International (Holdings) have called in outstanding loans worth $75 million, the company says.
The company also revealed yesterday that it was the target of litigation launched earlier this month by Banco Delta Asia claiming $610,000 in unpaid debts. The firm vowed to defend itself.
The announcement came as Wealthmark shares resumed trading yesterday following a suspension since November 23 last year. No shares were actually traded, and the exchange posted the November 23 closing price of 80 cents.
The handbag maker's woes began when the Independent Commission Against Corruption arrested its chairman, Simon Wong Chor-wo, in November, charging him with embezzling $20.8 million in corporate funds and making false statements to the firm's auditor, PricewaterhouseCoopers.
The commission also arrested but released without charge Wong's wife Rosita Andres, Eric Po and an unnamed employee.
The alleged offences took place in 2001.
Wong is scheduled to appear in Eastern Magistracy today for trial.
Without a new repayment agreement, Wealthmark would struggle to the meet the banks' repayment demands as it has just $11.9 million in cash and a monthly income of $17.6 million.
The company said that while new orders for its goods had fallen off since the arrest of its chairman, no existing orders had been cancelled. It expects no material changes to its business and continues to project a rise in sales on the mainland, where profit margins are higher than in its other markets.
In an effort to strengthen internal controls and rebuild its credibility, Wealthmark has appointed Ferrier Hodgson as independent financial accountant to review its financials on an ongoing basis.
But the company said it would be unable to update its financial records for the financial year to December last year as the anti-graft body took away books and records for investigation.
Wong and Ms Andres stepped down as executive directors on Monday. The firm has also withdrawn their right to handle company funds.
The board has installed Benito Chan Wai-kin and Tse Chung-sing as executive directors and appointed Wong's brother, Wong Chor-sang, and Danny Kwok Kee-ho as its authorised representatives.
The company has also commissioned an independent board committee to investigate any weaknesses in corporate governance over the coming three months.
Although Wong Chor-wo still controls 67.5 per cent of Wealthmark, the firm said he had undertaken not to interfere in management issues until the legal proceedings against him were resolved.
