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ST Engineering's Chinese unit files for bankruptcy after failing to dispose of assets
A SINGAPORE Technologies Engineering (ST Engineering) subsidiary has filed a bankruptcy petition in China, the Temasek-controlled technology, defence and engineering group said on Monday.
JHK - a road construction equipment joint venture between ST Engineering's land systems unit, ST Kinetics, and China's state-owned Jiangsu Huatong Machinery - was placed under members' voluntary liquidation in late 2016.
The bankruptcy petition - filed in Zhenjiang city, in the province of Jiangsu - was to avoid further cash outlay, according to ST Engineering's announcement on the Singapore Exchange website.
The company, which ended production in 2016 amid operating losses, was unable to dispose of its land and building assets "despite its best efforts for more than a year to secure buyers".
ST Engineering said that the failure was due to weak demand for industrial properties in the Zhenjiang area.
ST Kinetics owns 75.3 per cent of JHK, with its Chinese partner holding the remainder.
ST Engineering said that it has fully written down its investments in the joint venture, with a one-off charge in the three months to Sept 30, 2016.
That charge - to the tune of S$61 million - comprised an impairment of ST Kinetics' net carrying value in JHK, as well as closure costs such as staff compensation.
ST Engineering added that the bankruptcy petition is not expected to have any material impact on its consolidated net tangible assets per share and earnings per share for the current financial year.
The counter closed down by S$0.03, or 0.82 per cent, to S$3.62, before the announcement.