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Posts Tagged ‘Freight Links’

Freight Links loaned $45m to CHC months after issuing bonds

In Corporate governance, Humour on 29/09/2013 at 10:28 am

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?
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