Portek restructuring to cost US$2.04 million in 2007

Portek International Limited has been implementing a corporate restructuring drive to consolidate and streamline its business operations in Europe and mainland China.

As such, Portek has completed the disposal of its 51 per cent equity stake in the capital of La Meccanica Generale (LMG) to Finemme, one of the minority shareholders of LMG, for EUR534,700 (US$732,768), a company statement said. Located in Genoa, LMG is in the business of equipment maintenance and refurbishment.

Portek's coverage of the terminal and harbour equipment engineering business in the European and Mediterranean markets will continue to be served by Portek's wholly-owned subsidiaries, Portek Europe and Portek Systems & Equipment Pte Ltd, based in Luxembourg and Singapore, respectively.

Following the disposal, LMG has ceased to be a subsidiary of Portek. The loss on disposal is estimated at S$1.5 million (US$987,689). Portek will recognise the effects of the disposal in the financial year ended June 30 2007.

The net asset value of LMG, as of the end of last year, was EUR1,770,726.

In a related development, Jason Automation (North Asia) Co. Ltd, another wholly-owned subsidiary of Portek, has completed a restructuring exercise involving the closure of its Chengdu and Tianjin offices. The company said this was undertaken to streamline its organization and re-focus it on Shanghai and Shenzhen.

The restructuring of JNA also included the write-off of certain inventory, provision for doubtful debts and write-off of certain fixed assets, as well as the write-off of goodwill at the group level. The cost of JNA restructuring is estimated at S$1.6 million. Portek will recognize the effects of this restructuring in FY2007.

These activities are estimated to have resulted in an aggregate financial loss for FY2007 of about S$3.1 million (US$2.04 million).

In the medium-term, Portek does not anticipate further restructuring except for the closure of a few "largely inactive companies, to streamline and rationalize the overall group structure."