Lewis & Peat put on the block by receivers

Lewis & Peat put on the block by receivers

SINGAPORE (Dow Jones): Natural rubber dealer Lewis & Peat
(Singapore) Pte. Ltd. has been put up for sale by its receivers,
according to a document obtained by Dow Jones Newswires
Wednesday.

One of the leading rubber trading operations in Singapore,
Lewis & Peat (Singapore) had been expected to shut down after it
ran into financial difficulties.

It forms part of the Lewis & Peat group, a subsidiary of
Indonesia's PT Bakrie Sumatera Plantations. It also has
operations in the U.S. and the UK, and specializes in the popular
grades of rubber used for tire making, particularly the standard
Indonesian rubber 20 grade.

The Lewis & Peat group has been profitable for the last three
to four years, according to a source close to the group, but ran
aground late last year after an audit revealed the use of short-
term credit funds to finance long-term projects.

Hariwidono, president director of Bakrie Sumatera Plantations,
told Dow Jones Newswires Jan. 14 that Dutch-based Rabobank, a key
creditor of the Lewis & Peat group, refused to roll over its $60
million short-term trading facility after an audit showed that
the funds had been misused.

The group's directors petitioned for the Singapore division to
be put under interim judicial management in December, which was
rescinded Jan. 11. On the same day, the Singapore branch of
Rabobank appointed Ho Ai Lian, Nagaraj Sivaram and Ong Yew Huat,
partners at international business services firm Ernst & Young,
as receivers.

The document, a draft prepared by Ernst & Young, showed the
rubber dealer to have unrealized losses of $468,135 on its
outstanding contracts as of Jan. 18.

Of this amount, $439,068 was from unmatched sales of 20,502
metric tons of natural rubber, and $29,067 from 29,770 tons of
rubber that was unshipped on matched sales and purchases.

It has an unrealized profit of $13,751 from its purchases of
23,073 tons of rubber that haven't been sold.

Market valuations of the unmatched contracts are derived from
the Singapore Commodity Exchange's prices Jan. 13.

Lewis & Peat (Singapore)'s unaudited balance sheet as of Nov.
25 last year shows it owed its short-term creditors $4.58
million. Short-term credit usually involves loans that have to be
repaid within a year. In this case, the period is 180 days,
according to a source close to the company. Its total assets,
excluding current liabilities, totaled $6.33 million.

Money owed to it as of Dec. 26 totaled $3.6 million, from
buyers in South America and Singapore.

The document also shows Lewis & Peat (Singapore) holds a total
of 35.6 tons of rubber in South Africa, 16.4 tons of which are
latex, and 241.92 tons of rubber in Singapore.

Ernst & Young's Ho, Nagaraj and Ong are in preliminary
discussions with Sicom to match the above contracts in order to
pave the way for a third party to take over the contracts.

The receivers aren't seeking buyers for the other two
Singapore-registered companies - Lewis & Peat (Rubber) Holdings
Pte. Ltd. and Lewis & Peat Distribution Pte. Ltd. - because the
former is a holding company and the latter a funding vehicle.

Ho, Nagaraj and Ong were unavailable for comment, and an Ernst
& Young director involved in the case declined to comment when
contacted.

Despite having generated operating profits of $3.41 million
and $2.18 million in 1997 and 1998, respectively, Lewis & Peat
(Singapore) ran into financing difficulties after the group
failed to refinance the company's debt facilities when its
existing facilities expired Oct. 29, 1999, said the document.

This was due to "investment diversification programs not
related to the Singapore operations," according to the document.

Lewis & Peat (Singapore) incurred an operating loss of
$506,000 for the 11 months to Nov. 25, 1999, the document said,
citing unaudited management accounts.

Lewis & Peat (Singapore)'s gross margins fell to 2.5 percent
in 1999 from an average of 4 percent in 1998 after its existing
credit facilities expired Oct. 29, 1999.