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Centillion rescue plan is bounce to fail...
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superboy
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28-Jun-2007 16:33
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AMD is sueing Centillion for S$420 mil loss, Seagate, 3M and ST Micro are on the way to sue Centillion. The amount borrowed in to rescue is $30mil and these money is also not enough to pay one of the creditor UOB of $34 mil. That means now Centillion got another creditor of $30mil. There are many creditors waitinng at the door step of Centillion. How to rescue, please tell me. OHL and Equation only pump in $16 mil, this is only sufficient to pay the interest to creditors, rental and employee salaries. See the news report below.Centillion is a speculative share, it can sink into deep red sea any time. I think only those don't want to live then invest in a sinking ship. http://www.channelnewsasia.com/stories/analysis/view/169820/1/.html Instead, we heard that chip giant Advanced Micro Devices (AMD) had filed a writ of summons late last month to claim up to US$250 million ($420 million) from Citiraya for irregularities in the handling of its materials in the past. This is a huge sum. The latest rescue plan emerged a few days before the court hearing of Citiraya's judicial management proposal today. Chip Lian, the investment vehicle of tycoon Oei Hong Leong, and publicly-listed Heshe Holdings are proposing to inject $10 million each into Citiraya for working capital. They will have the option of investing a further $10 million each within one year of the initial investment. The interesting thing is that the two investors will receive 1.9 billion new shares in exchange for their combined $20 million investment. This means the shares are valued at just over one cent per share. That is a far cry from Citiraya's last traded price of $1.08 per share before trading was suspended in January this year. The two investors have the option to buy more shares in Citiraya at just over one cent per share. The point here is that shareholders of Citiraya have to write down their investment to this level, as that is the price investors are now prepared to pay for Citiraya shares. Citiraya will become a penny stock, if trading in its shares ever resumes on the Singapore Exchange. Will this takeover bid succeed, considering that various schemes so far this year to put Citiraya on a more stable footing have failed? The short answer is that the latest scheme is set to fail as well. There are too many negative factors working against it ? too many unknowns. The creditors want their money back but the new money being put in by the investors will be needed for working capital. Secured creditor UOB yesterday filed an application to seize two of Citiraya's factories, and intends to oppose the company's proposal for judicial management. Other creditors like DBS Bank may also not support the rescue scheme, if there is no clear and acceptable time-table for repaying Citiraya's loans in full. The CAD and CPIB investigations are still ongoing and once they are concluded, there could be further negative impact on the company and its employees. More clients and employees could desert Citiraya. The AMD writ of summons against Citiraya is also a huge cloud hanging over the company. Other clients who were shortchanged, like Seagate, 3M and ST Micro, may also sue Citiraya. Claims against Citiraya as well as loans outstanding are estimated to be well in excess of $400 million, versus the $20-million injection of new funds proposed by Chip Lian and Heshe. Finally, the Chip Lian/Heshe deal seems a rushed one ? due diligence has not been carried out. Heshe has claimed that it has the money to save Citiraya but Heshe itself does not have a track record to boast about, having been itself rescued not too long ago. |
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