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BenQ Corp shares fall to 10-year low on report of claims

Shares of BenQ Corp (明基), the nation's biggest maker of branded consumer electronics, fell to a 10-year low yesterday after a report the company may face 500 million euros (US$667 million) in claims from its bankrupt German mobile-phone unit.

The company's stock fell 3.9 percent to close at NT$12.50 on the Taiwan Stock Exchange, the lowest since Jan. 6, 1997.

The Economic Daily News, a Chinese-language newspaper, reported yesterday that Martin Prager, the insolvency administrator of German unit BenQ Mobile, will soon file the claim to the parent company.

The report raised concerns that the mobile-phone unit BenQ bought in 2005 from Siemens AG may further erode earnings after driving the Taiwanese parent to a record loss last year. The German handset maker, once the industry's third-largest producer, is being liquidated after losing market share to larger rivals such as Nokia Oyj and Motorola Inc.

"BenQ won't be able afford to pay all this debt if this becomes a reality," Arthur Hsieh (謝宗文), an analyst at UBS AG in Taipei said by telephone. "No one knows what the next negative news will be and it seems BenQ doesn't have a clue either."

BenQ hasn't received any claims from the German subsidiary or the insolvency administrator so far, Jean Hsu (徐晴), a BenQ spokeswoman, said yesterday.

About 4,350 creditors of BenQ Mobile, the German unit, have registered total debt claims of 1.2 billion euros, or quadruple the estimated value of its assets, the Central News Agency reported on Thursday, citing Prager.

Creditors of the insolvent company include Brazilian soccer star Ronaldo, the report said.

BenQ had hired the three-time soccer player of the year to feature in commercials for BenQ Mobile, which in 2005 was the sponsor for Spain's Real Madrid, Ronaldo's team at the time.

BenQ reported a record annual loss of NT$27.61 billion (US$836 million) earlier this week after its purchase of the German unit failed to raise profit or sales. The deficit wiped out any profit the company had made since 1999.

Liquidation proceedings for BenQ Mobile began in January after a three-month search for a new investor ended without success.

The bankruptcy affects more than 3,000 workers in Germany and has hurt suppliers from chipmaker Infineon Technologies AG to phone parts makers Perlos Oyj and Balda AG.

Yesterday's drop drove the stock below the previous 10-year low set last week after Taiwanese prosecutors investigated possible insider trading by BenQ officials.
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