Semi-Tech set to contest lawsuits over royalties
SEMI-TECH (Global), its directors, parent company and a subsidiary have been accused of a wide range of wrong dealings in three legal actions in the United States and one in Hongkong.
Semi-Tech says all are groundless and it will contest all of them.
All relate to royalty payments allegedly due to Bicoastal Corporation, a US company which once owned Singer, the US firm famous for its sewing machines.
In a Hongkong writ which Semi-Tech said was served on Thursday afternoon, Bicoastal alleges it has been underpaid royalties for the Singer brand name.
Bicoastal says the royalties should be 1.5 per cent of gross sales of goods with the Singer trademark since May 1989.
Among its allegations were that directors James Henry Ting, Frank Edward Holmes and Clara Loh Yim-yong had changed Semi-Tech's domicile from Hongkong to Bermuda to avoid paying the royalty fees and had failed to disclose to the Hongkong courts during thechange that litigation with Bicoastal was taking place.
Separately, Bicoastal has started three parallel legal actions in a US District Court in Florida.
The first is against Semi-Tech, Mr Ting, Mr Holmes and Mr Chuck Tam, chief financial officer of International Semi-Tech Microelectronics (ISTM), Semi-Tech's Canadian controlling shareholder.
The second is against Singer NV and others, and the third against ISTM and others.
All three seek damages of more than US$100 million.
In a statement posted with the Hongkong stock exchange, the company said: ''The board of directors of Semi-Tech consider these actions by Bicoastal to be unfounded. It does not consider that these actions will have any significant effect on the operations or financial condition of Semi-Tech or any of its subsidiaries or affiliates.'' Ms Loh added: ''The board is quite relaxed about the whole thing.'' The company's shares fell 20 cents to $15.20 yesterday.
The company has made provisions for a previous legal action by Bicoastal. In December, Bicoastal was awarded US$45.2 million by a Federal Bankruptcy Court against Shinwa, the new name for the group's now unlisted Hongkong vehicle.
Shinwa has posted security worth about US$60 million while it appeals against the judgement.
The Semi-Tech statement yesterday said the triple US action ''seeks collection of the same judgement for which Shinwa has already posted security and obtained a stay from the US courts pending its appeal''.
A Baring Securities report this month that recommended selling the shares said: ''The $45 million royalties payment and the lack of transparency are expected to be the overhangs of Semi-Tech.'' The previous case related only to the use of the Singer name on computers and other non-consumer items.
The Hongkong action launched yesterday covered all products, Ms Loh said.
Bicoastal spun off the Singer business in 1985. Shinwa bought 77 per cent of it in 1989 and took it private, which meant a new trademark agreement had to be struck.
Singer has been refloated on the New York Stock Exchange and Semi-Tech owns 51 per cent.
The Hongkong action is the third attempted by Bicoastal in Hongkong in as many months. An attempt to enforce the US Bankruptcy Court ruling in Hongkong has been stayed, and an attempt to use the US judgement to wind up Shinwa was dismissed after a court hearing on April 9 and 10.
Ms Loh said the company would not make any further provisions for payments because of the latest legal actions.
The company had not asked for its shares to be suspended because ''it could be construed negatively''.
She denied the allegation in the Hongkong writ that Bicoastal had not received royalties and said some had been sent ''very recently''.
However, Semi-Tech disagreed with Bicoastal about the formula to be used in calculating the amount of royalties due.