Serina Wee told the court that cashflow projections from the US music producer had showed that album profits would allow Xtron to repay the bonds bought by CHC.
Justin Herz, Sun Ho’s manager in the US, had given the defendants a cashflow projection based on sales of 1.5m units of the Crossover album. Today in court, Xtron’s accountant Serina Wee testified that this projection showed that Xtron would be able to repay the bonds given the profits from the album.
Wee had told the court during her evidence-in-chief that former fund manager Chew Eng Han had depended on Herz’s projection when he sought a loan from Hong Kong’s Citic Ka Wah bank. Today, she said that based on that projection, Xtron would be able to service the bank loan from Citic Ka Wah which had a 16 percent interest rate. Since the bank loan had a higher interest than the Xtron bonds, there would not be any issue for Xtron to repay the bonds.
The former church finance manager was responding to the prosecution’s accusation that she did not have real concerns about the redemption of the bond upon maturity. The deputy public prosecutor produced an email that Wee had sent to Tan Ye Peng, City Harvest Church’s deputy senior pastor. In the email, she told Tan the cashflow projection based on album sales of 200,000 units showed that Xtron would not be able to repay the bonds upon maturity. She had also attached a Xtron cashflow projection to the email.
The prosecution questioned Wee why had she not factored in the Xtron bond redemption into the attached cashflow projection. She said that while she did not put in the figures administratively, she had highlighted it to Tan in the email that based on that assumption they would not be able to redeem the bonds. As for why she had not done the cash flow based on sales of 1.5m units, Wee explained that she did not have the cash flow with the 1.5m projection, although she had knowledge about that projection from the US.
The DPP then put to Wee that her lack of real concern was because Wee and her co-defendants knew that the transaction was a sham. Wee disagreed emphasizing that if she was not concerned, she would not have highlighted it in the email.
The court also heard that following a request from the auditors, Wee did a recoverability analysis on the amended Xtron bonds. By then, there was no longer a need to do any analysis on the first Xtron bonds because it had been subsumed under the amended bonds.
Cross examination continues Monday, May 11, at 9.30am.