Lee has issued a warning letter on the rental dispute after five months of negotiations
Singapore Paincare Holdings (SPH) is asking its own CEO and largest individual shareholder Dr Bernard Lee to give the company more time to respond to a demand for a rent increase on a property that is wholly owned by Lee and currently used by the company to run a clinic.
The board of Singapore Paincare announced on January 18 that it had received a warning letter from Lee demanding, among other things, an increase in the monthly rent from the current $9,000 to $24,750.
Lee is the sole owner of a company called Medbridge Marketing, which owns building No. 07-33 at Mount Elizabeth Specialist Centre, 38 Irrawaddy Road, No. 07-33. It is now used by Singapore Paincare to run a clinic called Paincare Centre @ Novena.
The letter of demand followed a five-month renegotiation process between Lee and Singapore Paincare regarding the lease for this property.
As recently as December 20, Singapore Paincare announced that it had reached an agreement on a monthly rent of $28,000 for another property owned by Lee through Medbridge, located at 290 Orchard Road, #18-03 Paragon, which now operates a clinic called Singapore Paincare Centre. The rent was backed by an independent valuation report.
While Lee is the largest individual shareholder and CEO of Singapore Paincare with a stake of just over 28%, there are several other major shareholders.
According to the annual report, the second largest shareholder of Singapore Paincare is the Sian Chay Medical Institution with 17.13 percent. The third largest shareholder is Dr. Jeffrey Loh Foo Keong, Executive Director and COO of Singapore Paincare, with 16.29 percent.
Two other listed companies are also among the top 20 SPH shareholders. HC Surgical Specialists, a colorectal specialist, holds 2.59%, while Medinex Otxwhich provides administrative services for clinics, owns 1.33%.
In its statement dated January 27, Singapore Paincare’s board said it had responded to Lee by saying it was considering appointing a new property valuer and/or an independent financial adviser to “resolve the dispute”.
Singapore Paincare, through its lawyers, had asked Lee to provide all documents and evidence proving that the current monthly market rent for the premises is US$33 per square foot.
“The Company had also requested Medbridge to hold back on the matter until the requested documents and/or other evidence regarding the proposed rent increase are received to enable the Company to consider its options, including obtaining shareholder approval of the proposed rent increase,” Singapore Paincare’s board of directors said.
Based on the requested rental price, the total amount to be paid to Lee for the Mount Novena unit alone over a three-year lease would be US$891,000, representing approximately 10.8% of the Group’s NTA as at 30 June 2023.
“Accordingly, the Company is required to engage an independent financial advisor to assess whether such a transaction would be detrimental to the interests of the Company and its minority shareholders,” Singapore Paincare said in a statement dated January 18.
The Board of Directors had asked for an extension until two weeks after the Extraordinary General Meeting in order to be able to respond substantively to Lee’s requests via Melbridge.
In its response on January 23, Medbridge provided “extracted Whatsapp correspondences” that Singapore Paincare did not describe in its announcement, providing “alleged evidence” to support its “claim” that the market rate was actually $33 per square foot per month.
“In the same letter, Medbridge also asked for precise details of when the extraordinary general meeting will be held and when the company will be able to respond to the letter of demand,” adds Singapore Paincare.
On January 25, Singapore Paincare informed Lee that it had appointed a property appraiser.
The board of Singapore Paincare informed Lee in the same letter that if the valuation report does not show that the market rent for the premises is in line with the rental rates proposed by or agreed with Medbridge, Singapore Paincare will have to engage an independent financial advisor and hold an extraordinary general meeting to seek shareholder approval of the proposed transaction between Medbridge and Novena Paincare Centre.
Singapore Paincare had also informed Lee that due to the unpredictability of possible intervening events, it was unable to confirm the date of the EGM, but that it intended to respond and hold the EGM by April 15.
Singapore Paincare shares were last traded at 16 cents. In July 2020, the company was still trading at 22 cents.
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