TSE restricts another company

The nation's stock market regulators yesterday restricted trading in shares of Summit Computer Technology Co (皇統科技) to cash transactions only, after the nation's largest educational CD title distributor reported financial defaults, the Taiwan Stock Exchange Corp (TSE) said on its Web site.

TSE said it will reclassify Summit ComputerTechnology shares as requiring full delivery beginning tomorrow -- which means that investors won't be able to buy shares of the company using borrowed money in so-called margin trading.

TSE made the announcement after Summit Computer Technology chairman Lee Huang-kuei (李皇葵) admitted that the company has inflated sales by NT$3.7 billion between 2001 and this year, in a move to beautify its financial books.

"To help the company survive and to avoid credit being tightened by lenders during an industrial down cycle, we inflated our sales over those four years to NT$6 billion from NT$2.38 billion on the books," Lee said at a press conference held at the TSE after the stock market closed.

Summit Computer Technology shares dropped 1.6 percent to close at NT$3.07 on the TSE. The company reported a NT$211.4 million loss in the second quarter, following a NT$17.82 million profit in the previous quarter.

"I and my treasurer have turned ourselves in to the judicial agencies and we will face whatsoever legal sanctions we deserve," Lee said. "Even so, I personally did not embezzle a cent from the company."

Lee's personal debt ranges between NT$200 million and NT$300 million. The company is also owing some NT$1 billion, including a syndicated loan of around NT$700 million from local lenders, he said.

The Land Bank of Taiwan (土地銀行) and the Taiwan Cooperative Bank (合作金庫) are Summit Computer Technology's two major creditor banks.

Lee said he would like to have discussions with creditor banks as soon as possible to resolve the issue and he has not ruled out the possibility for seeking company reorganization.

Summit Computer Technology was listed on the TSE in September, 2001 after it had been traded over-the-counter since late 1999. The company will become the third technology company over the past three months to face regulators' scrutiny over its finances.

Infodisc Technology Co (訊碟科技), a maker of compact discs and digital video discs, was placed on restricted trading after the company failed to explain how it remitted US$77.75 million (NT$2.62 billion) from Rabobank's Singapore branch on June 30, which the company claimed went to an account of Gold Target Fund that it invested in.

Local chipmaker Procomp Informatics Co (博達科技) was delisted from the TSE last week, after the company failed to explain its default on a NT$2.98 billion bond payment and failed to identify the whereabouts of NT$6.3 billion in cash.