Electronics Production | May 30, 2011
SMT Holding Inc. enters restructuring
The Group’s revenue for 1Q (ended 31 March 2011) was HKD 432.5 million as compared to HKD 523.4 million in the corresponding period of 2010. Deloitte Touche Tohmatsu Reorganisation Services Department in Hong Kong is to advise the company on a debt and corporate restructuring.
The decrease in revenue was mainly due to a drop in orders for LED backlights for LCD-TV business and the weakened demand for computer peripheral products. The net margin for the quarter was adversely impacted by lower output due to a shortage of materials and labour and an inventory allowance for an increased number of end-of-life projects. Surface Mount Technology (Holdings) Inc. has reported pre-tax operating losses for three consecutive financial years. As a result of the substantial loss in Q4FY2011, "we became aware that we would be unable to comply with the financial covenants in respect of our bank borrowings". Steps in the restructuring process include: - the Changchun factory ceased operations in May 2011 - operations at the facilities Suzhou and Dalingshan are being scaled down - this will include adjustments to staff numbers at these to locations - idle assets are currently being disposed of to reduce indebtedness