TA Corporation has requested for a voluntary suspension of trading in its shares pending stakeholder engagement and “clarity” on the company’s financial position on July 17.
In the same filing on SGX, the company’s board of directors announced that Tiong Aik Construction (TA Construction), a wholly-owned subsidiary of TA Corp, has been placed under provisional liquidation.
According to the announcement, the management of TA Construction has resolved to appoint provisional liquidators after assessing that it is “presently unable to pay its debts as and when they fall due”.
This is due to an acute cash flow tightening at TA Construction arising from difficulties in collecting payments and retention monies, as well as the increasing demands for additional costing and funding to address labour and material price hikes.
Meanwhile, heightened interest rates have led to higher borrowing costs and an unfavourable financing environment. Coupled with a slower-than-expected take up of available-for-sale properties developed by TA Corp, this has limited the extent to which it is able to continue supporting the cash flow requirements for TA Construction and its ability to secure new projects in light of its current financial condition, says the board.
Considering the implications of TA Construction’s provisional liquidation and TA Corp’s intention to “engage in a broader and more holistic manner” with its lenders, noteholders, business partners, suppliers and customers, the board has considered it “prudent” to put a voluntary suspension of trading of its shares in place.
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TA Corp also has exposure to parent guarantees and other forms of financial support for TA Construction and its projects, while there is a possibility of cross-defaults being triggered by the provisional liquidation for loan facilities taken by the other subsidiaries.
The company has appointed Messrs Deloitte & Touche Financial Advisory Services as financial advisor and Messrs Reed Smith Resource Law Alliance as legal adviser to assist with a review of its financial position and to advise on the next steps to be taken.
Shares in TA Corp last traded at 7.3 cents on July 17 before its trading halt on the same day.
