Englong cash flow position 'critical'
Loss-making property developer Englong International says its cash flow position is 'extremely critical'.
It said the problems had arisen from a combination of over-expansion and an inability to achieve an orderly disposal of its assets in time to manage its liquidity position.
Englong is unable to service interest due on bank facilities, and the group has not been able to reduce its debt position by funds generated from operating activities. It said external factors also had 'severely affected' its working capital.
Overdue debts have grown to about $51 million and its cash flow deficit is about $7 million a month.
At the end of May, the group had outstanding borrowings of about $651.3 million, secured by fixed charges on some group assets.
The company has formulated a three-part restructuring plan to alleviate its liquidity problems.
This involves disposal of all its properties in Hong Kong, negotiations with bankers to reschedule overdue principal/interest payments to reduce the company's short-term cash requirement, and increasing the company's share capital through equity issues.
The company has had discussions with the banks regarding the rescheduling of overdue principal and interest payments, but has so far received no commitments regarding their willingness to participate in the plan.