Singapore Technologies Engineering Ltd (ST Engineering) updated on Monday (23 April) that Jiangsu Huatong Kinetics Co., Ltd and Jiangsu Huaran Kinetics Co., Ltd (collectively JHK or the company) have filed a bankruptcy petition to the People’s Court of Dantu District in Zhenjiang, Jiangsu.
It was said that this move follows the Group’s announcement on 14 December 2016 when JHK was placed under members’ voluntary liquidation.
JHK is the joint venture between ST Engineering’s land systems arm, Singapore Technologies Kinetics Ltd (ST Kinetics) and China’s state-owned enterprise Jiangsu Huatong Machinery Co., Ltd.
In a statement, Temasek controlled ST Engineering stated that the shareholders of JHK have agreed on this course of action to avoid further cash outlay by the company, as JHK was not able to dispose of its assets (land and buildings) despite its best efforts for more than a year to secure buyers due to the weak demand for industrial properties in the Zhenjiang area.
Prior to this, the company had resolved relevant staff matters, including welfare and compensation settlement.
ST Engineering noted that it has fully written down its investments in this JV business having recorded the $61m one-off charge for the third quarter ended 30 September 2016, consisting of an impairment of ST Kinetics’ net carrying value in JHK and closure costs including staff compensation.
The bankruptcy petition is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.