Kejian to commence restructuring by year end
Shanghai. October 14. INTERFAX-CHINA - Shanghai Stock Exchange-listed China Kejian Co. Ltd. has become the second listed Chinese handset maker, after Amoi Electronics Co. Ltd., seeking to undergo major restructuring in the face of huge losses, the company announced on Oct.14.
According to the announcement, the company predicted that it would continue to incur a loss over the third quarter, estimating net losses to reach RMB 14 million ($2.05 million), compared to a net profit of RMB 104.97 million ($15.36 million) during the third quarter of 2008.
Kejian suspended handset manufacturing activities in the first quarter of 2008 and has since mainly relied on its OEM manufacturing joint venture with Samsung to generate revenue.
The company first reported net losses in the fourth quarter of 2008.
Kejian expects to release a detailed restructuring plan before the end of the year.
The company's previous attempts to sell debt through private placements to potential buyers failed due to undisclosed reasons.
According to Xu Yiding, an industry analyst with China Minzu Securities, it is very likely that Kejian will fully abandon its handset manufacturing activities and be acquired by a larger company.
"However, the company still faces the possibility of being delisted if it fails again in its restructuring plans and continues to report losses over the fiscal years of 2009 and 2010," Xu warned.
Interfax previously reported that Amoi, formerly a leading Chinese handset maker, is also seeking to undergo restructuring, after reporting net losses for three consecutive years.
Amoi plans to announce a finalized restructuring scheme sometime in November.
-HJL