TSE says Abit Computer shares now `full delivery'

The Taiwan Stock Exchange Corp (TSE) ruled yesterday that shares of Abit Computer Corp (陞技電腦) will be a "full delivery" stock starting today, until the motherboard maker clarifies doubts about its financial portfolio.

This means that Abit's shares cannot be traded on margin or sold short, said Su Song-chin (蘇松欽), senior executive vice president of the stock exchange.

This means the shares are restricted to cash-only transactions.

"Abit on Tuesday failed to provide reasonable explanations to clear up eight points in its financial documents," Su said.

Su said the company can rebut the exchange's decision by providing valid documents, otherwise, the company could be ousted from the bourse "in a year or so."

According to the exchange, financial irregularities were found in Abit's business transactions and re-investments which may have infringed rights of shareholders and increased risk for investors.

The company was found to have closed huge electronic-parts deals with seven Hong Kong-based companies -- although those firms were all registered at the same address and only had working capital of HK$200 million (US$12.8 million) each.

The exchange suspects Abit may have faked deals to boost its sales and that the Hong Kong associates may be subsidiaries from the same group, or just paper companies.

The exchange also found Abit's issuance of an European convertible bond in 1992 problematic and suspects that insider trading might have been involved.

According to Su, Abit told the stock exchange last Tuesday that its NT$4.1 billion-worth of deals didn't have invoices because the shipments were not transported back to Taiwan. The TSE said that the explanation did not clear up its concerns.

Abit chairman Lu Yi-tsun (盧翊存) reportedly told the exchange that his company's performance remains healthy and vowed to soon clear up any doubts, a Chinese-language business daily reported yesterday.

Lu couldn't be reached yesterday for comment.

Other prominent people associated with the company were also unavailable for comment yesterday, including corporate governance expert Ko Chen-en (柯承恩), who has served as an independent member of Abit's board.

Ko is chairman of the Corporate Governance Association (中華公司治理協會) and an accounting professor at National Taiwan University. He is currently abroad.

Another corporate governance advocate, Joseph Lee (李存修), who is a finance professor at National Taiwan University, also refused to comment in his capacity as the company's supervisor.

The TSE has been taking a more aggressive stance toward companies with problematic books.

Chipmaker Procomp Informatics Co (博達科技) was deslisted from the bourse in September af-ter failing to explain its default on a NT$2.98 billion loan payment and identify the whereabouts of NT$6.3 billion in cash.

Summit Computer Technology (皇統科技) also found itself restricted in September after it inflated its sales by NT$3.7 billion between 2001 and this year in a bid to beef up its books.