Shares of Singapore precision engineer crash 39 per cent on fears it could default on US$41m bond
Shares of CW Group Holdings, a precision engineering solutions provider, tumbled 39 per cent to a record low in Hong Kong on Thursday after it revealed that it is likely to default on S$55.25 million (US$41 million) of notes.
The shares fell to HK$0.68 as trading resumed after being suspended on Wednesday, the lowest level since they were listed on the main board in 2012.
The Singapore-headquartered firm said in a filing to the Hong Kong stock exchange that it was unable to raise funds via a bond issue and it was unlikely to secure alternative financing sources on such short notice to redeem its S$55.25 million bonds that mature on June 25, as well as pay the 2017 final dividend of 2.36 Hong Kong cents per share to shareholders on July 27 as initially scheduled.
Moreover, Bank of China (Hong Kong) has demanded immediate repayment of about HK$157.5 million (US$20 million) in outstanding banking facility and about US$14.5 million debt from the company and its executive directors William Wong Koon Lup and Sam Wong Mun Sum.
The bank wants the debts settled by June 28 and July 16 respectively.
“As the financing exercises may or may not be completed, shareholders, holders of the
outstanding series 1 notes and potential investors of the company should exercise caution
when dealing in the securities of the company,” said Wong, who is also the chairman and CEO.
CW Group said it has appointed RSM Corporate Advisory (Singapore), Morgan Lewis
Stamford (Singapore), Rajah & Tann Singapore and Akin Gump Strauss Hauer & Feld (Hong Kong) as advisers to help resolve the issues through financing exercises such as engaging with holders of the
S$55.25 million notes to extend the due date and to liaise with Bank of China and other lenders on their demands.
The advisers are also formulating other fundraising activities although the company has yet to conclude terms for any suitable opportunities with potential investors, the filing said.
The company’s revenue declined by HK$2.3 billion or about 5.1 per cent in 2017 because of insufficient supply to meet demands that resulted in longer delivery lead time.
However, profits rose 6.3 per cent from a year earlier to about HK$249.3 million largely due to the foreign exchange gains and a gain recorded on partial redemption of the notes issued, while allowances of about HK$5.2 million and HK$29.6 million were made in 2016 for the impairment of goodwill and impairment of plant and equipment respectively.