Thu, Jul 01, 2004 - Page 10 News List

TSE asks Cradle Technology to prove cash flow

FINANCIAL CONCERNS Company officials say they are suffering the fallout from the Procomp debacle, but that they plan to sell shares to raise funds

STAFF WRITER , WITH BLOOMBERG

Shares of Cradle Technology Corp (衛道科技) were limit-down at NT$3.34 yesterday after the Taiwan Stock Exchange asked the Taipei-based computer network software developer to detail its cash flows to prove whether it can meet debts and other payments.

The company's shares have been on the decline since Procomp Informatics Ltd (博達科技) defaulted on a NT$2.98 billion bond payment on June 17. The two companies are not related.

Procomp chairwoman Yeh Su-fei (葉素菲) was arrested last week on embezzlement and fraud charges after failing to explain the whereabouts of NT$6.3 billion in cash which was on the books during the first quarter.

Apart from Cradle Technology, around 80 listed companies were reportedly under investigation by regulatory authorities for their financial states, Chinese-language newspapers reported yesterday.

The Securities and Futures Commission has asked Taiwan Stock Exchange and Gretai Stock Exchange to closely monitor 25 out of 80 listed companies, whose corporate bonds and exchangable bonds are expect to reach maturity in the near term, the newspapers said, without citing sources.

The news came after Premier Yu Shyi-kun told a Cabinet meeting yesterday that accounting firms and underwriters may have to take responsibility for Procomp's bond payment default if they are found negligent in their jobs.

Seeking to prevent a recurrence of such a scandal, Yu said the Ministry of Finance and other regulatory authorities should continually monitor financial state of all listed companies. He also asked the ministry to help revise laws to reinforce corporate governance principles and accountants' legal responsibilities.

To avoid defaulting on a NT$1 billion (US$30 million) bond payment due next month, Cradle Technology said it plans to raise NT$600 million by selling shares to private investors, spokesman Philip Ko (柯清雲) said. The company currently has about NT$100 million in cash equivalents, he said.

Overseas investors, who hold about NT$600 million in bonds convertible into Cradle Technology shares, were asked not to exercise their rights to ask it to buy back the bonds next month, Ko said.

Cradle Technology's finances collapsed after four banks delayed a NT$1.5 billion loan it expected to obtain this month, Ko said.

``If investors are willing to wait for another year, we will not have financial difficulties,'' he said.

``Cradle Technology is a victim of Procomp Informatics' default,'' he said.

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