Singapore Paincare Holdings (SPH) is asking its own CEO and single largest shareholder Dr Bernard Lee to give it more time to respond to a rental hike demand for a property wholly owned by Lee himself and now used by the company to operate a clinic.
According to Singapore Paincare's board on Jan 18, it received a letter of demand from Lee, asking for, among others, a higher monthly rental of $24,750, up from $9,000 now.
Lee is the sole owner of an entity called Medbridge Marketing, which owns #07-33 within the Mount Elizabeth Specialist Centre at 38 Irrawaddy Road, #07-33. It is now used by Singapore Paincare to operate a clinic called Paincare Center @ Novena.
The letter of demand follows a rental renegotiation process between Lee and Singapore Paincare for five months over this property.
Just on Dec 20, Singapore Paincare announced it reached a deal to pay a monthly rental of $28,000 for another property owned by Lee via Medbridge at 290 Orchard Road, #18-03 Paragon, which is now used to operate a clinic called Singapore Paincare Center. The rental rate was backed by an independent valuation report.
While Lee is the single largest shareholder and CEO of Singapore Paincare with a stake of around just over 28%, there are several other substantial shareholders as well.
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Singapore Paincare's second-largest shareholder, according to its annual report, is the Sian Chay Medical Institution which owns 17.13%. Dr Jeffrey Loh Foo Keong, Singapore Paincare's executive director and chief operating officer, is the third largest shareholder at 16.29%.
Two other listed companies are among the top 20 SPH shareholders as well. HC Surgical Specialists, a colon specialist, holds 2.59% while Medinex OTX , which provides admin services to clinics, owns 1.33%.
In its Jan 27 announcement, Singapore Paincare's board says that in order to "resolve the passe", it had replied to Lee that it was considering the appointment of a new property valuer and, or independent financial adviser.
Via its lawyers, Singapore Paincare had asked Lee to provide all documents or evidence that the existing monthly market rental rate for the premises is $33 psf.
"The company had also requested Medbridge to hold its hands in the matter pending receipt of the requested documents and/or other evidence regarding the proposed increased rental rate, in order for the company to assess its options, including seeking shareholders’ approval for the proposed increased rental rate," says Singapore Paincare's board.
Based on the requested rental rate, the total amount to be paid to Lee just for the Mount Novena unit over a three-year tenancy agreement would hit $891,000, representing approximately 10.8% of the group’s NTA as at June 30, 2023.
"Accordingly, the company is required to appoint an independent financial advisor to opine on whether such a transaction is prejudicial to the interests of the company and its minority shareholders," says Singapore Paincare in its Jan 18 announcement.
The board had asked for an extension of time until two weeks after the EGM is held to substantively respond to Lee's requests via Melbridge.
In its response on Jan 23, Medbridge, showing "extracted Whatsapp correspondences" which Singapore Paincare in its announcement did not further describe, provided "purported evidence" to support its "assertion" that the market rate is indeed $33 psf per month.
"Medbridge, in the same letter, also requested to know precisely when will the EGM be held and when the company will be able to respond to the letter of demand," adds Singapore Paincare.
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On Jan 25, Singapore Paincare informed Lee that it had hired a property valuer.
Singapore Paincare's board, in the same letter, told Lee that in the event the valuation report does not provide that the market rental rate for the premises is as proposed or agreeable by Medbridge, Singapore Paincare will need to engage an independent financial adviser and conduct an EGM to seek shareholders’ approval of the proposed interested party transaction between Medbridge and Novena Paincare Center.
Singapore Paincare had also told Lee that due to the unpredictability of the potential intervening events, it is unable to confirm when the EGM will be held, except that it aims to respond and hold the EGM by April 15.
On Jan 29, the company announced that independent director Richard Yap has resigned, citing "personal interests". Yap's resignation follows less than a fortnight after the company's financial controller's resignation. In its Jan 18 announcement, Singapore Paincare says Karen Lim resigned to "pursue other career opportunities".
Singapore Paincare shares last traded at 16 cents. It was listed back in July 2020 at 22 cents.
