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Trading in Procomp suspended

Procomp Informatics Ltd (博達科技) will be suspended from trading its shares as the local chipmaker failed to unravel an account mystery that led to the company’s financial crunch, a company agency said yesterday.

The Securities and Futures Commission, the nation's securities watchdog, yesterday announced its decision to suspend trading in the company, having acted immediately on a request by Taiwan Stock Exchange Corp.

Procomp trading will be suspended beginning Thursday, the exchange said.

The exchange sent Procomp an ultimatum on Friday demanding that the company explain why it defaulted a NT$3 billion bond, while still having adequate NT$6 billion in liquid assets on its books.

"As Procomp hasn't given any further explanation about the problematic NT$6 billion in assets, we have decided to suspend trading in Procomp shares in order to safeguard shareholders' interests," the stock exchange said in a statement.

The exchange also announced that an investigation will be launched into the affair.

In addition to the NT$3 billion in bonds on which the company defaulted, Procomp has an additional NT$5.9 billion in unpaid bank loans, according to company chairperson Yeh Su-fei (葉素菲). Procomp said it lost NT$3.67 billion, or NT$10.43 a share, last year.

The scandal has sent Procomp shares diving by the 7 percent daily limit for three straight trading sessions yesterday after the chipmaker filed a restructuring plan last week. Procomp shares closed lower at NT$6.86 each on the TAIEX yesterday.

The Procomp debacle has set off a chain reaction in the local equity market, said Kevin Chung (鐘國忠), a deputy manager at Jih Sun Securities Investment Consulting Co (日盛投顧).

"Gun-shy investors have been dumping small-cap shares, especially those with weak profitability or those with corporate bonds coming due in the near term," Chung said.

"Cradle Technology Corp (衛道科技) is one of the companies in danger," he said.

Cradle Technology shares plunged 7 percent to NT$4.46 yesterday as investors appeared to grow concerned about the company's solvency.

Cradle, a workstation and server-equipment maker, announced plans last month to raise some NT$600 million to repay corporate bonds that come due next month.

To distance itself from association with Procom's problems, Global Sun Technology Inc (陽慶) yesterday said it was not facing a crisis in repaying NT$880 million in corporate bonds that will come due in November 2008.
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