Published January 29, 2009

Jurong Tech faces more bank demands

ABN Amro, Sumitomo Mitsui Banking Corp and UOB are all claiming full repayment

By CHEW XIANG

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More banks have demanded loan repayments from Jurong Technologies Industrial Corp, which has also issued a profit warning and asked that its shares be suspended from trading.

Yesterday, the group disclosed that it was facing demands from ABN Amro Bank, Sumitomo Mitsui Banking Corporation, and United Overseas Bank (UOB).

ABN Amro has claimed for full repayment of US$8.09 million and S$5.85 million under banking facilities extended to the group. Sumitomo is claiming for full repayment of US$11.8 million and S$12.9 million, while UOB is demanding repayment of US$11.1 million and S$44.6 million.

The banks have served notice that if their demands are not met within three weeks from the date of receipt of the statutory demand, they may commence winding up proceedings against the group.

The latest demands will pile on the pressure on the contract manufacturer, which is already facing repayment demands for about $170 million in loans from three other banks. The first statutory demand - from OCBC Bank - was served on the group on Jan 9. Jurong Tech was given three weeks - or to the end of this week - to repay the $56 million claimed by OCBC or be wound up. DBS is applying to put a Jurong Tech subsidiary into judicial management, while KBC is claiming repayment.

Over the Chinese New Year long weekend, Jurong Tech had asked for trading in its shares to be suspended 'for such time' as it needs to negotiate with creditors.

It said that in the second half of last year it negotiated 'for indulgence or increases in facilities and made certain concessions', but these amounts were just a small proportion of its total debt. The company has disclosed unsecured borrowings of $282.3 million due in one year or less as at Sept 30, 2008.

Legal action by OCBC, DBS Bank and Belgian bank KBC has caused 'instability' to the group, Jurong Tech said in its weekend statement, adding that it is meeting its creditors 'to pursue amicable treatment of their claims'. 'This will then provide a base for co-ordinated support from them to restore operational stability.' With the banks' support it can rationalise and consolidate to improve its prospects, said the company.

In its profit warning issued along with the request for the suspension of its shares, Jurong Tech said shrinking demand for electronic goods and fluctuations in exchange rates mean it is likely to book a 'material loss' for the year ended Dec 31, 2008, reversing a $29 million profit in 2007.

Jurong Tech has been suffering since a key customer, Motorola, started cutting back orders amid increasingly difficult times for tech companies.

Analysts say one option could be for Jurong Tech to sell its stake in listed Map Technology Holdings and hope the cash from this can satisfy creditors until more capital can be raised.