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Ryobi Kiso says letters of demand total S$23.1m

GROUND engineering solutions firm Ryobi Kiso Holdings on Wednesday said it and its unit have received letters of demand for S$23.1 million from several financial institutions.

The claims come from American Express International; Bank of China; CIMB Bank Berhad; Hong Leong Finance; KBC Bank; and Malayan Banking. The lenders have not begun legal proceedings as yet. 

Ryobi Kiso had earlier announced that its unit Ryobi Kiso (S) had been hit by letters of demand from several banks after the unit missed payments, and had warned that these letters of demand may trigger cross default provisions in other banking facilities and project contracts of the group. 

The company has appointed PricewaterhouseCoopers as its independent financial adviser to work out a restructuring proposal together with the banks. The company is assessing the financial impact of these claims on the project contracts of the group. 

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In its fiscal third-quarter results for the period ended March 31, 2018, the group was hit by a lower value of work undertaken in the period and prolonged work phases of several projects, which led to higher operating costs incurred. This led it to swing to a net loss of S$6.5 million from a net profit of just S$106,000 in the previous year-ago period.

The group's revenue for Q3 was S$28 million, a fall of 29.5 per cent from the year-ago period.

Its current liabilities excluding borrowings stand at S$63.02 million, and it recorded cash and cash equivalents of S$13.51 million, down from S$21.98 million nine months ago.

The group had a S$168.9 million order book as at March 31, 2018, comprising projects from public infrastructure, public housing, residential, commercial and geoservices.

It was "unlikely that there will be an improvement in the group's financial performance in the next reporting period", the group earlier cautioned, with the construction sector set to remain challenging. "External factors such as keen competition, rising costs and the tight labour market will continue to add pressure on the group's performance."

Trading in the shares of Ryobi Kiso has been suspended since late June.