Ground engineering solutions firm Ryobi Kiso Holdings' subsidiary Ryobi Kiso (S) has defaulted on repayment obligations to "certain bank lenders" and is in breach of the corresponding banking facilities.

Ryobi Kiso has requested a voluntary suspension of its mainboard-listed shares and has appointed PricewaterhouseCoopers (PwC) as an independent financial adviser to assist in the matter.

PwC will help establish the group's current financial position and projections, and design a restructuring proposal in concert with bank lenders to enable the group to continue operations and tide over the current situation, Ryobi Kiso said in a Singapore Exchange filing yesterday.

The group warned the default could "trigger cross default provisions in other banking facilities and project contracts of the group", and it was assessing the situation with its legal advisers and PwC.

In its latest fiscal third-quarter results for the period ended March 31, the group was hit by a lower value of work undertaken in the period and prolonged work phases of several projects, which plunged it into the red to the tune of $6.5 million compared to a profit of $106,000 in the same period last year.

Its current liabilities excluding borrowings stood at $63.02 million, and it recorded cash and cash equivalents of S$13.51 million, down from S$21.98 million nine months ago. It had an order book of $168.9 million, comprising public infrastructure, public housing, residential, commercial and geoservices projects.

It is "unlikely that there will be an improvement in the group's financial performance in the next reporting period", it cautioned in its earnings report, while "keen competition, rising costs and the tight labour market" will continue to "add pressure on the group's performance".

Industry watchers say such issues are widely felt across the construction sector and could affect more companies' ability to repay debt.

Still, to say the entire sector is at risk "is too much of a sweeping statement", said Mr Nandakumar Ponniya, head of the construction practice at law firm Baker McKenzie Wong & Leow.

"Over the last few years there have been a trickle of companies taking on construction work that have run into problems, not so much because they are in construction but because of issues in specific industry sectors such as power and oil and gas."