Body to ask Lewis & Peat to settle all contracts

Body to ask Lewis & Peat to settle all contracts

SINGAPORE (Dow Jones): The rubber trade associations of Thailand, Indonesia, Malaysia and Singapore plan to ask the Lewis & Peat group and its receivers to honor all outstanding contracts, Thai Rubber Association president Choositt Ophaswongse told Dow Jones Newswires Thursday.

TRA members had asked the association to look into the matter for them, Choositt said.

The Lewis & Peat group, with operations in Connecticut, U.S., London and Singapore, ran into financial difficulties after its chief creditor, Dutch-based Rabobank refused to roll over its US$60 million short-term trading facility.

A big rubber dealer, it still has outstanding contracts with suppliers that haven't been settled. Producers in Thailand, Indonesia and Malaysia are worried about not being paid for their rubber or not getting their rubber back, if they have already shipped it to the group, said market sources.

Lewis & Peat's operations in UK and Singapore have been put on sale by their receivers, international business services firm Ernst & Young.

Its U.S. operations are negotiating with Rabobank to settle financial claims for the division, which is currently under U.S. Chapter 11 bankruptcy protection. Under the chapter, a company is protected from its creditors while it reorganizes its finances with the intention of staying in business.

At present, not all rubber contracts for January shipment have been settled, said Choositt, confirming market talk on the issue.

Ernst & Young had been selective in the types of contracts to honor, preferring those that are profitable, he said.

Choositt said the association is still surveying the extent of losses that its members have incurred.

"We don't have the whole picture because some weren't willing to disclose the figures," he said.

Choositt emphasized that the rubber trade associations will need legal help in drafting their letter. He couldn't say when the letter will be ready.

TRA, the Rubber Association of Indonesia or Gapkindo, Malaysian Rubber Exchange and Rubber Trade Association of Singapore will discuss the issue at the next ASEAN Rubber Business Council meeting in Singapore on Feb. 19, he said. Asean refers to the Association of Southeast Asian Nations.