SINGAPORE (Aug 26): Datapulse Technology says its audit committee has agreed with the findings of an independent financial advisor that two hotel management agreements flagged by Singapore Exchange Regulation (SGX RegCo) are “on normal commercial terms”.
In response to a notice of compliance issued last month by SGX, Datapulse adds that the audit committee and independent financial advisor found the hotel-related deals are “not prejudicial to the interest of the company and its minority shareholders”.
The group says the audit committee had looked at major terms in the hotel management agreements, including the contractual period; base fees; incentive fees based on the gross operating profit of the respective hotels; sales, marketing, reservation and centralised service fees, operator restrictions; and the terms of termination.
It adds that the audit committee had reviewed the agreements as if they were interested person transactions, and had engaged an independent financial advisor and an industry expert to help in its deliberations.
In a filing to SGX on Sunday morning, Datapulse says the audit committee is satisfied that the interests of the company in the respective investments are in line with the interests of its minority shareholders.
It adds that the group is only a minority co-investor in the two hotel deals, and that the appointment of the hotel management companies had been subject to a majority vote, in line with commercial practice.
SGX in July queried Datapulse over its recent investments in two hotels, as well as the awarding of hotel management agreements to companies linked to chairman Aw Cheok Huat.
The company’s audit committee was ordered to review the terms of any hospitality-related agreement to be entered into with ICP Group, which Aw is the chairman and controlling shareholder of.
Datapulse had appointed Travelodge Hotels Asia as the hotel operator for Holiday Inn Express Euljiro in Seoul and Bay Hotel Singapore, which the group has recently acquired minority stakes of 15% and 5%, respectively.
TLA is a wholly-owned subsidiary of ICP, which also provides hotel management services to certain hotels owned by the parent company of Bizcentre Capital – Datapulse’s joint venture partner for the Seoul hotel acquisition.
SGX also ordered Datapulse to disclose its basis for determining that its investments in minority stakes in the hotels were in the interest of its minority shareholders.
See: Datapulse issued notice of compliance by SGX over hotel-related deals
This is not the first time Datapulse, which diversified into the hospitality industry after shutting down its compact discs and blu-rays discs manufacturing business, has found itself in the crosshairs of SGX.
Last year, the group had earned a rebuke from SGX RegCo for failing to conduct proper due diligence in its controversial purchase of haircare company Wayco Manufacturing.
The company was also embroiled in a boardroom tussle over the diversification plans.
Less than a year after the $3.4 million acquisition, Datapulse then announced it was selling the haircare products manufacturer back to its original owner, Way Company, for $3.2 million – some 7.5% lower than its purchase price.
See: Datapulse to sell back haircare business Wayco just a year after acquisition
As at noon on Monday, shares in Datapulse have fallen 13% to a new 52-week low of 20 cents.
