Restructuring Possible for SMT Holdings
HONG KONG -- Surface Mount Technology (Holdings) Ltd. has named a restructuring advisor to aid with its debt and corporate restructuring.
The contract electronics manufacturer named Deloitte Touche Tohmatsu to work with its lenders and senior management as it struggles to overcome steady losses and a debt:revenue ratio of about 20%.
In a statement, the EMS company said it has had "constructive discussions" with the majority of its bank lenders. As of Dec. 31, the company owed HK$420 million ($54 million) in near- and long-term debt, down from HK$552 million ($72 million) in the March quarter.
It also noted that it expects a "very substantial" impairment loss in the current fiscal year due to a reassessment of recoverable value of all property, plant and equipment.
Further details will be provided on or prior to May 30, when the company reports its fiscal fourth-quarter results.
SMT Holdings, a Top 50 EMS company, has endured continued losses despite a large increase in revenue over the past fiscal year. It attributes the problems to higher wages and other costs at its China facilities. While the firm's revenue was up 27% through the three quarters ended Dec. 31, its cost of sales rose 29% and its post-tax losses rose 13%.
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