Tue, Jul 27, 2004 - Page 11 News List

Cradle defaults on bonds


Cradle Technology Corp (衛道科技), a Taipei-based workstation and server-equipment maker, will be restricted from trading on credit, starting tomorrow, after defaulting on a NT$338 million bond payment, the nation's stock market regulator said yesterday.

Shares of Cradle Technology could be suspended from trading if the company fails to repay debt or reach an agreement with creditors within three months, the Taiwan Stock Exchange Corp said on its Web site.

The company's shares dropped 3.63 percent to NT$1.86 on the TAIEX.

Cradle Technology has another NT$600 million in overseas convertible bonds, which will mature on Aug. 22. The company said it had NT$39 million in cash as of earlier this month.

In a statement filed with the exchange, the company said it defaulted on a corporate bond payment because it failed to get financial support from banks and investors to pay back corporate bonds, as wary lenders are afraid to act because of fears generated by Procomp Informatics Ltd's (博達科技) default last month.

Procomp Informatics Ltd (博達科技) surprised investors by defaulting on corporate bonds worth NT$2.98 billion last month under circumstances which have given rise to allegations of fraud. The company filed a restructuring plan in court ahead of the default.

The two companies aren't related.

Cradle Technology was trying to overcome a cash crunch by seeking syndicated loans from specific investors, company spokesman Philip Ko (柯清雲) said in a statement to the exchange early this month.

"But we haven't got enough money yet," he said at the time.

At a press conference held at the exchange yesterday, company chairman Chang Tai-ming (張泰銘) asked overseas investors, who hold about NT$600 million of bonds convertible into Cradle Technology shares, not to exercise their right to ask the company to buy back the bonds.

To return the operation to normalcy, Chang said that Cradle Technology has cut its workforce from about 400 people to 300, and may cut around 150-180 in the near future. The company also plans to scrap money-losing divisions, he added.

Chang did not discuss a substantial debt repayment plan yesterday, but said the company has been discussing intensively with eight credit banks over a repayment plan.

Cradle Technology's finances collapsed after several local lenders such as Land Bank of Taiwan (土地銀行) delayed a NT$1.5 billion loan the company was expected to obtain this month, according to Ko.

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