Lewis & Peat put on the block by receivers<\/p>\n
SINGAPORE (Dow Jones): Natural rubber dealer Lewis & Peat
\n(Singapore) Pte. Ltd. has been put up for sale by its receivers,
\naccording to a document obtained by Dow Jones Newswires
\nWednesday.<\/p>\n
One of the leading rubber trading operations in Singapore,
\nLewis & Peat (Singapore) had been expected to shut down after it
\nran into financial difficulties.<\/p>\n
It forms part of the Lewis & Peat group, a subsidiary of
\nIndonesia's PT Bakrie Sumatera Plantations. It also has
\noperations in the U.S. and the UK, and specializes in the popular
\ngrades of rubber used for tire making, particularly the standard
\nIndonesian rubber 20 grade.<\/p>\n
The Lewis & Peat group has been profitable for the last three
\nto four years, according to a source close to the group, but ran
\naground late last year after an audit revealed the use of short-
\nterm credit funds to finance long-term projects.<\/p>\n
Hariwidono, president director of Bakrie Sumatera Plantations,
\ntold Dow Jones Newswires Jan. 14 that Dutch-based Rabobank, a key
\ncreditor of the Lewis & Peat group, refused to roll over its $60
\nmillion short-term trading facility after an audit showed that
\nthe funds had been misused.<\/p>\n
The group's directors petitioned for the Singapore division to
\nbe put under interim judicial management in December, which was
\nrescinded Jan. 11. On the same day, the Singapore branch of
\nRabobank appointed Ho Ai Lian, Nagaraj Sivaram and Ong Yew Huat,
\npartners at international business services firm Ernst & Young,
\nas receivers.<\/p>\n
The document, a draft prepared by Ernst & Young, showed the
\nrubber dealer to have unrealized losses of $468,135 on its
\noutstanding contracts as of Jan. 18.<\/p>\n
Of this amount, $439,068 was from unmatched sales of 20,502
\nmetric tons of natural rubber, and $29,067 from 29,770 tons of
\nrubber that was unshipped on matched sales and purchases.<\/p>\n
It has an unrealized profit of $13,751 from its purchases of
\n23,073 tons of rubber that haven't been sold.<\/p>\n
Market valuations of the unmatched contracts are derived from
\nthe Singapore Commodity Exchange's prices Jan. 13.<\/p>\n
Lewis & Peat (Singapore)'s unaudited balance sheet as of Nov.
\n25 last year shows it owed its short-term creditors $4.58
\nmillion. Short-term credit usually involves loans that have to be
\nrepaid within a year. In this case, the period is 180 days,
\naccording to a source close to the company. Its total assets,
\nexcluding current liabilities, totaled $6.33 million.<\/p>\n
Money owed to it as of Dec. 26 totaled $3.6 million, from
\nbuyers in South America and Singapore.<\/p>\n
The document also shows Lewis & Peat (Singapore) holds a total
\nof 35.6 tons of rubber in South Africa, 16.4 tons of which are
\nlatex, and 241.92 tons of rubber in Singapore.<\/p>\n
Ernst & Young's Ho, Nagaraj and Ong are in preliminary
\ndiscussions with Sicom to match the above contracts in order to
\npave the way for a third party to take over the contracts.<\/p>\n
The receivers aren't seeking buyers for the other two
\nSingapore-registered companies - Lewis & Peat (Rubber) Holdings
\nPte. Ltd. and Lewis & Peat Distribution Pte. Ltd. - because the
\nformer is a holding company and the latter a funding vehicle.<\/p>\n
Ho, Nagaraj and Ong were unavailable for comment, and an Ernst
\n& Young director involved in the case declined to comment when
\ncontacted.<\/p>\n
Despite having generated operating profits of $3.41 million
\nand $2.18 million in 1997 and 1998, respectively, Lewis & Peat
\n(Singapore) ran into financing difficulties after the group
\nfailed to refinance the company's debt facilities when its
\nexisting facilities expired Oct. 29, 1999, said the document.<\/p>\n
This was due to \"investment diversification programs not
\nrelated to the Singapore operations,\" according to the document.<\/p>\n
Lewis & Peat (Singapore) incurred an operating loss of
\n$506,000 for the 11 months to Nov. 25, 1999, the document said,
\nciting unaudited management accounts.<\/p>\n
Lewis & Peat (Singapore)'s gross margins fell to 2.5 percent
\nin 1999 from an average of 4 percent in 1998 after its existing
\ncredit facilities expired Oct. 29, 1999.<\/p>",
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