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Electronics Production | July 12, 2010

Kontron has trouble in Asia

The German Kontron AG is forming a EUR 34 million risk provision for outstanding receivables due from customers in Malaysia, Taiwan and Hong Kong.
The Executive Board sees itself as forced to take this measure since contractually agreed bank guarantees have not been presented by the agreed deadline of Friday, July 9, 2010.

The debtors are customers of Kontron Malaysia who operate in the socalled Electronic Manufacturing Service (EMS) business. Kontron Malaysia processed these custom orders through subcontractors. Some of these business relationships have already existed since 2007, and payment obligations have been satisfied over the years.

Kontron is now launching civil and criminal law measures against the debtors and the local management since there is a reasonable suspicion of corruption. Initial research indicates that customers, subcontractors and local management may have collaborated fraudulently to Kontron's detriment. Kontron AG's Executive and Supervisory boards have appointed one of the world's leading law firms.

The outstanding receivables will be fully written down in Kontron's balance sheet in the second quarter as a precautionary measure.

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