Published February 7, 2009

Jurong Tech faced with judicial mgt

By CHEW XIANG

	Email this article
	Print article
	Feedback

A CREDITOR has applied to put mainboard-listed Jurong Technologies Industrial Corp under judicial management, the company said yesterday.

Jurong Tech, a troubled contract manufacturer, said it was served court papers by an unnamed creditor yesterday on the proposed appointment of Tam Chee Meng, of Deloitte & Touche, as judicial manager of the company.

Judicial management is when a court appoints a manager to direct the affairs of a company in trouble. Under Section 227A of the Companies Act, this can happen when a company is unable to pay its debts but there is some chance of keeping the business going without having to wind it up.

According to Rule 1303(3) of the SGX listing manual, the Singapore Exchange can suspend trading of shares in a company placed under judicial management. The company will then have to submit and implement resumption proposals, or face delisting. Jurong Tech has been suspended from trading ever since the Chinese New Year weekend and last traded at 2.5 cents.

The company is facing legal demands for repayment of loans from at least six banks claiming in total over $200 million. The company has disclosed unsecured borrowings of $282.3 million due in one year or less as at Sept 30, 2008.

Yesterday, Jurong Tech said that it had written to creditors earlier this month to suggest the immediate appointment of Mr Tam as a special accountant, ahead of his official appointment as judicial manager. Mr Tam has also been nominated as judicial manager for a key subsidiary of the company, pending a court hearing on Feb 20 initiated by DBS Bank, another creditor.

Jurong Tech said that they were taking a 'proactive approach' in inviting Mr Tam before his official appointment. The company has drafted a restructuring plan which it is expected to present to Mr Tam by early next week.

'It would be in the interest of all parties for the company's management to meet up with Mr Tam and provide him with the necessary information and assistance required for an expedited understanding of the group's operations,' said Lin Li Fang, chairman of Jurong Tech in a statement.

Ms Lin added that the company would 'try its best to restore the suppliers' and customers' confidence in the group'.

The company recently issued a profit warning, saying that it was likely to book a material loss for the year ended Dec 31, 2008. It made a $29 million net profit for its last full financial year in 2007, but has been weighed down since Motorola, a key customer, started cutting back orders.

The financial crisis in the last quarter of 2008 compounded its woes as the company found itself unable to refinance or repay its increasingly hefty debt.

OCBC Bank first issued a statutory demand on Jan 9 to get the company to repay some $55 million, or face winding up.

DBS then applied to put Jurong Tech's subsidiary under judicial management. Other banks clamouring for repayment include Belgian outfit KBC, ABN Amro Bank, Sumitomo Mitsui Banking Corporation, and United Overseas Bank.