Midas' unit found to have irregularities totalling 755m yuan

A WHOLLY-OWNED subsidiary of troubled railway parts maker Midas Holdings has been found to have irregularities worth about 755 million yuan (S$158 million) in its transactions.

On Wednesday, Midas said that Dalian Huicheng Aluminium (DLHC) had an undisclosed 300 million yuan Citic loan, which was entered on April 9, 2015 for two years. The loan and the asset which the loan was intended for were not recorded in DLHC's financial records.

Among other things, it was also found that there was a separate undisclosed 50 million yuan guarantee for the benefit of Chongqing Huicheng Aluminium Co (CQHC).

DLHC had entered a guarantee agreement with China Citic Bank in Chongqing Branch on Dec 15, 2015. Yang Xiao Guang, the legal representative then, and DLHC seals were sighted in the guarantee agreement.

Mr Yang, however, did not report the guarantee for CQHC to the board, and the financial statements of the group since the completion of acquisition of Huicheng Capital in July 2016 omitted the guarantee.

As the guarantee was not reported, the information provided by the vendors of Huicheng Capital to Midas relating to the circular is materially wrong.

Midas said that the financial impact of the irregularities found may widen as the directors await additional bank statements, loan statements and loan documents.

The board will issue further announcements when there are material developments.