SINGAPORE - Singapore-listed TA Corp said its wholly owned subsidiary, Tiong Aik Construction, has been placed under provisional liquidation as it is unable to pay its debts.
Mr Lin Yueh Hung and Mr Ng Kian Kiat from RSM Corporate Advisory have been appointed as joint and several provisional liquidators, TA Corp said in a bourse filing on Monday.
Tiong Aik Construction has undertaken a number of condominium projects over the years, most recently The Florence Residences in Hougang and Fourth Avenue Residences in Bukit Timah.
TA Corp noted that Tiong Aik Construction’s board of directors resolved to appoint provisional liquidators after assessing that its financial condition was such that it was “presently unable to pay its debts as and when they fall due”.
Tiong Aik Construction is currently experiencing an “acute tightening” of cash flow arising from difficulties in collecting payments and retention monies, partly due to potential liquidated damages claims, the company said.
At the same time, the subsidiary has had to meet increasing demands for additional costs and funding to address labour and material price hikes. Heightened interest rates have also led to higher borrowing costs and an unfavourable financing environment, the company noted.
These circumstances, coupled with a “slower-than-expected” take-up of available-for-sale properties developed by the group, have “limited the extent to which the group is able to continue supporting the cash-flow requirements for Tiong Aik Construction and its ability to secure new projects in the light of its current financial condition”, it said.
TA Corp has also requested voluntary suspension of the trading of its shares as a matter of prudence, pending engagement with its stakeholders and clarity on the financial position of the company, as well as the group.
It noted that the group plans to “engage in a broader and more holistic manner with its lenders, note holders, business partners, suppliers and customers in relation to the provisional liquidation and its consequent implications on the group”.
In addition, the company has “exposure from parent guarantees and other forms of financial support for Tiong Aik Construction and projects undertaken by it in its ordinary course of business, and (there is) the possibility of cross-defaults being triggered by the provisional liquidation for loan facilities taken by the other members of the group”.
“As the board and management are still in the midst of evaluating the situation, the trading suspension seeks to allow disclosure and dissemination of relevant information prior to trading resumption and avoid market confusion,” it said.
TA Corp’s board of directors has appointed Deloitte & Touche Financial Advisory Services – led by Mr Tan Wei Cheong – as financial adviser and Reed Smith Resource Law Alliance – led by Mr Johnny Lim – as legal adviser to assist the board with a review of the financial position of the group, as well as advice on the next steps to be taken.
Shares of TA Corp closed at 7.3 cents last Friday before trading was suspended. THE BUSINESS TIMES
