First Sponsor (SGX:AND) expects to recognize an impairment charge of roughly SG$36.7 million in its first-half financial statements following an adverse ruling by a court in Dongguan, China, according to a Tuesday filing with the Singapore Exchange.
The Dongguan No. 2 People's Court invalidated the purchase of residential units in the Humen Oasis Mansion project by First Sponsor's subsidiaries, ruling that the transaction involved malicious collusion with the project developer.
The court ordered the property titles re-registered under the project company's name within 30 days.
First Sponsor paid 292.1 million yuan for the properties. With the court giving no instructions on returning the funds, the group considers a meaningful recovery unlikely.
First Sponsor is currently reviewing the judgment with legal advisors to evaluate an appeal.