Abterra Ltd  announced that Tianjin Kaitemei Trading Co. Ltd, a wholly owned subsidiary of the company, has on 16 March 2011 entered into a conditional sale and purchase agreement with Shenzhen Manfu Industrial Co., Ltd for the proposed acquisition of an additional 55.22% of the equity interest of Zuoquan Xinrui Metallurgy Mine Co. Ltd. Tianjin Kaitemei will acquire from Shenzhen Manfu, a 55.22% of the equity interest of Xinrui at an initial purchase price of RMB883,520,000, subject to any adjustments.

Director and Chief Executive Officer

27 February 2011

KPMG found to have acted in conflict of interest

Big Four firm was both Abterra Ltd’s scheme administrator and sole liquidator for shareholder’s claimant

ESTHER NG

estherng@mediacorp.com.sg

SINGAPORE

But accounting firm KPMG also acted as the sole liquidator of Tan Holdings Private Limited (THPL), which had made a $4.4-million claim against Abterra’s then majority shareholder Prosperity Steel (Asia).

Last month, the High Court found the accounting giant had “acted in conflict in their roles” as Abterra’s scheme administrator and as liquidator of THPL and ordered KPMG to be removed.

The Court appointed Deloitte & Touche Financial Services as Abterra’s new scheme administrators.

Abterra, formerly known as Hua Kok International, had entered into a Strategic Subscription and New Business Agreement on Aug 30, 2004.

The agreement was that the company would receive a large capital injection by Prosperity in the form of share subscriptions that would make it the new majority shareholder of the company, with a stake of 70 per cent.

Abterra’s creditors were to receive shares in the company once their claims had crystallised.

In a document to the court, Abterra general manager John Baey said that as KPMG executive director Bob Yap had already been appointed as sole liquidator of THPL when the accounting firm acted as Abterra’s scheme administrator, it “would have already been in an apparent position of conflict once THPL claims an interest in the shares of the company through Prosperity”.

Mr Yap countered that THPL’s claim against Prosperity came either from “public information or from information in THPL’s liquidator’s possession” and that Abterra “(had) always been aware of (his) appointment as liquidator to THPL”.

But the court agreed with Abterra, which was representedby lawyer Chia Boon Teck.— As the scheme administrator, it was supposed to protect the interests of its client, Abterra Limited, a coal and iron ore trading company, from its creditors.