Procomp crisis leaves questions

Procomp Informatics Ltd (博達科技) chairwoman Yeh Su-fei (葉素菲) yesterday called for creditors to back a two-year restructuring proposal that aims to return the chipmaker to normal operation.

"We hope our creditors and investors will grant a two-year grace period for us to save our company and safeguard shareholders' interests," Yeh told reporters during a press conference yesterday, two days after the company surprised investors by requesting court receivership.

Procomp, based in Tamshui, has already sent staff overseas to look for new investors and hired Baker & McKenzie to take charge of the restructuring procedure, Yeh said.

Yeh's comments came after the financially-troubled chipmaker filed a restructuring application to the court on the eve of a NT$3 billion bond payment default to avoid the seizure of its machinery and assets.

Some of the 1,600 Procomp bond holders, who are mostly individual investors, waited outside the Taiwan Stock Exchange Corp for a previously scheduled press conference by Yeh, in order to hear her comments about the default and possible plans to pay the bonds. Their one-hour wait proved in vain, however, as Yeh did not come up with a substantial solution to repay the debts.

Meanwhile, it was reported that securities regulators were investigating Yeh for possible insider trading violations. However, the chairwoman defended her decision to hold a disastrous overseas share sale, through which the company planned to raise US$117 million to repay the bond payment. The sale was aborted on Wednesday.

Yeh, 46, is currently the largest shareholder of Procomp with 14-percent stake.

In addition to its outstanding bonds, Procomp has a total of NT$5.9 billion in unpaid bank loans, she said.

But without advanced negotiations with creditors, including Procomp bond holders and more than 10 local lenders, hopes for a revival of the firm could be dashed, said an official from Hua Nan Commercial Bank (華南銀行) who requested anonymity.

Hua Nan is Procomp's second-largest creditor, with a combined NT$800 million loans outstanding to the company as well as unspecified stock holdings, according to the official.

"Some creditors said they are against the restructuring proposal, which will pile up bad loans," he said.

Without the support of creditors, Procomp could risk bankruptcy, as the opinion of creditors will play a big role in the court's ruling. Under the Corporate Law (公司法), the court must make a ruling on Procomp's restructuring request within the next six months.

The insolvent company is likely to meet with its creditors as early as next week to discuss the restructuring plan, a Procomp official told the Taipei Times on the sideline of the press conference.

Large banks, including Chiao Tung Bank (交通銀行), the Industrial Bank of Taiwan (台灣銀行) and Chang Hwa Commercial Bank (彰化銀行), are all Procomp creditors, according to Yeh.

At yesterday's conference, Yeh shunned a pivotal question about why the company defaulted on the bond payments while it still has NT$6.3 billion worth of financial derivatives in its accounts.

She only said the fund was from three foreign banks -- Commonwealth Bank, Rabobank International Singapore branch and Metro Bank -- and was frozen for unknown reasons.

Separately, Securities and Futures Commission Chairman Ding Kung-hwa (丁克華) yesterday denied a media report that his commission had decided to launch a secret investigation into 25 allegedly financially-questionable companies listed either on the stock exchange or the over-the-counter markets, after Procomp declared its inability to pay off the nearly NT$3 billion in corporate bonds.