Shares of Taipei-based Evergreen Construction Corp (長鴻營造) yesterday closed down by the daily 10 percent limit at NT$1.62 on the Taipei Exchange after the engineering and construction firm announced it is filing for financial restructuring after a series of payment defaults.
The slump came one day after the cash-strapped company said in a filing with the stock exchange filing that it plans to seek court approval for financial restructuring.
“Evergreen Construction will ask for an emergency ruling on the restructuring application to give it space and time to reorganize its finances and meet debt obligations,” the filing said.
A series of debt payment defaults has weighed on the company’s financial heath and disrupted its normal operations, the filing said.
Evergreen Construction is building the high-speed rail station in Yunlin County and the nation’s first light-rail system in Kaohsiung, among other public construction projects.
The company, an affiliate of debt-ridden Singfor Life Insurance Co (幸福人壽), failed to honor NT$157 million (US$4.8 million) in debt payments owed to downstream contractors, who on Tuesday protested to demand debt settlements.
As of the end of last month, Evergreen Construction has incurred NT$2.54 billion in debt, compared with NT$3.33 billion in assets, the filing said.
The company attributed nearly 200 bounced checks earlier this month to Typhoon Dujuan, which delayed remittance.
Local media reports said that Evergreen Construction is a victim of a financial scandal plaguing Singfor Life, whose former chairman, Eric Teng (鄧文聰), allegedly embezzled funds before financial regulators took over the firm and sold it to Cathay Life Insurance Co (國泰人壽).
Evergreen Construction said it would explore alternative financing to solve its liquidity crunch after lenders such as Land Bank of Taiwan (土地銀行) and Taiwan Business Bank (臺灣企銀) refused to grant it credit.
The firm said it has yet to receive payment for construction of the light-rail system, a residential complex in Taipei’s Shilin District (士林) and another residential project in New Taipei City.
The delay is due to an ongoing investigation into Singfor Life, Evergreen Construction said.
So far this year, the company’s stock has slumped 79.2 percent, significantly deeper than the sector’s 31.36 percent decline and the TPEX’s 13.14 percent fall, according to the Taipei Exchange, the bourse for small or medium-sized capitalization companies.
Evergreen Construction shares were suspended from trading between April 7 and Sept. 22 after the company failed to post its financial results in violation of disclosure requirements.
The company managed to resume trading on Sept. 23 as full-cash delivery stock, the stock exchange said.
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