A sharp-eyed TRE reader wrote to TRE as follows
Straits Times article dated 27 Sep reported on a $45 million new loan taken out by City Harvest Church (CHC). The loan was not taken from any financial institution but a logistics company listed on the Singapore Exchange called Freight Links Express Holdings (FLEH).
FLEH’s core business is in freight forwarding. To offer a loan of this size suggests its core business may have changed. Have shareholders been notified? At 8 per cent per annum, the interest charged by FLEH is also quite high. But I guess CHC is desperate and will grab anything that comes along because no financial institution will offer a religious organisation a $45 million loan to purchase properties based on expected future ‘earnings’ from worshippers.
What is interesting is that FLEH had managed to raise $100 million in a Fixed Rate Note issue bearing an interest rate of 4. 6 per cent just 4 months ago. http://www.freightlinks.net/MediaRelease/Press54.pdf These IOUs are normally used for general corporate purposes and financing investments related to its core business, certainly not for loans.
Business wise, it certainly does make sense to be earning 8 per cent while paying only 4.6 per cent without taking any risk.
However, this will set a precedent for every other listed companies on the exchange to stray from their core business. Should this be allowed by the Singapore Exchange?
Phillip Ang
Surprising that our journalists from our “constructive”, nation-building media did not raise this corporate governance issue. Waiting for govt media briefing or telephone call to tell them what to say?
While I’m sure the transaction is perfectly legal, there is the governance issue of whether a logistics provider should become a lender to a church, albeit for a sum which is “peanuts” in the context of its financials. And there is the issue of the bond issue: normally used for general corporate purposes and financing investments related to its core business, certainly not for loans.
Restores my faith in the quality of people who read and post on TRE. Glad to see that not all readers and posters are “PAP are bastards” ranters. Maybe, they moved on to TOC or TRS?
Thoughts of a Cynical Investor 
“Many people believe that if one understands the Bible and can interpret the Bible, it means that he has found the true way. Is it really so simple? No one knows the truth about the Bible. The Bible is only a record of the history of God’s work and only a testimony about the first two stages of God’s work. You cannot understand God’s purpose in doing his work from the Bible. People who read the Bible all know that the Bible records the two stages of God’s work done in the Age of the Law and the Age of the Grace…When viewed from today’s perspective, things of the past are all history. No matter how true and real they are, they are history. History cannot substitute for reality. For God does not look back on history! So, if you only understand the Bible but do not understand the work God wants to do now, and if you believe in God but do not search for the work of the Holy Spirit, you do not know what it means to seek God. If you read the Bible in order to study the history of Israel, that is, in order to study the history of God creating all heaven and earth, you are not a believer in God. But today since you are a believer in God, a pursuer of life, one pursuing to know God, not one pursuing dead letters and doctrines or one pursuing to understand the history, you have to seek the present intention of God and search for the trend of the Holy Spirit’s working. If you were an archaeologist, you could read the Bible. Yet you are not an archaeologist but a believer in God, so you had better seek the present intention of God.”
—From <>
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You say that you are sure that the transaction is perfectly legal. Have you considered that it may be a moneylending transaction in breach of the Moneylenders Act? Or a banking transaction in breach of the Banking Act? Was the transaction in breach of Stock Exchange regulations if the money came from the fruits of the bond issue which was for purpose other than the loan? Should the authorities not investigate?
Can you pls refrain from posting here, TOC and TRS type questions. This blog is meant for those who have some grounding in commercial, financial and legal matters.
So this is not a legal matter? And you know better?
I know better than you.
Still…. From the point of view of governance, that transaction may not be too unreasonable. It is (i) low risk and (ii) low footprint (operationally; actually essentially no footprint). Other than the “unforeseen” publicity issues, it would not impinge negatively on its business.
If, on the other hand, man effort gets redirected, then there should be a call as to whether it is worthwhile to stray from the core business. (This reminds me of 30+ wasted boardroom minutes on deciding whether to do a patenting JV with A*STAR and straying from organizational mission. In the end, a decision was made with a strong basis in “HR issues”.)
Think so much for what. Got “arbitrage”, take only.
Further reading: http://www.freightlinks.net/SGXReports/SGX204.pdf
Freight Links did this to get right of first refusal to acquiring part of CHC’s Suntec stakes.
Thks.
yangzijiang shipbuilding is also involved in financing business although its core business is shipbuilding. since, SGX didn’t raise a issue with it, neither will it raise this issue to Freigh Links. Anyway, as an outside minority passive shareholder, if you don’t like the diworsification of business, the best option is still to sell the share.