Listed on the Singapore Exchange in March 20051
, Asia Water Technology
Ltd (AWT) faced problems such as rapidly deteriorating operating cash
flow problems and a breach of financial covenants relating to the bonds
it issued. The board then proposed to accept an injection of funds from
a new investor that involved the issue of a large number of new shares
and a non-renounceable rights issue, which would substantially dilute
existing shareholders. This led a substantial shareholder to propose
the removal of directors on the basis that the directors had not acted
in the best interests of the company. A boardroom tussle then ensued.
The objective of this case is to allow a discussion of issues such as
the evaluation of financing options, duties of directors in an insolvency
situation, board composition, the removal of directors by shareholders
and the resignation of directors.