SINGAPORE : Childcare operator Cherie Hearts is
suing Australian firm G8 Education for breach of
contract.
It has also successfully applied for a court order
overturning a receivership appointment by G8, which the operator
said was unlawful.
The move by G8 had put Cherie Hearts under threat of
liquidation.
But while the operator appears to be out of the woods for now, its
sale agreement with G8 is up in the air, with possible implications
on future expansion plans by Cherie Hearts.
Lawyers for Cherie Hearts declined comment on the deal pending the
outcome of the trial.
Last October, G8 agreed to buy over Cherie Hearts' Singapore
operations for S$24.6 million, as part of a move by the
Australian-listed firm to expand its childcare business into
Singapore.
An affidavit submitted by Cherie Hearts detailed how, as part of
the business acquisition contract, G8 would extend a S$12 million
loan to Cherie Hearts and assume part of its outstanding
debts.
The loan was to have been offset against the purchase price, and
Cherie Hearts would receive some S$9 million once the sale was
completed.
But on March 22, with a few weeks to go, receivers were called into
the operator's Cecil Street headquarters, with G8 alleging a loan
default of S$5.5 million.
This was disputed by Cherie Hearts, which said its loans had been
effectively paid off as of March 1.
It later found out that G8 had also exercised its security over the
alleged loan default, and, without its knowledge, assumed control
of 12 of its subsidiary companies in Singapore.
Cherie Hearts has since assumed control of the 12 centres.
The case is now pending trial.
- CNA/ms/ls