Singapore firm suffers setback in bid for P2-B airport project

China Development Corp. has sold its interests in the Singapore-based Sum Cheong Corp. Pte. Ltd., drastically reducing the latter’s chances of making a successful bid for the P2-billion Puerto Princesa International Airport project.

Sum Cheong is one of the proponents in the project which would upgrade the existing airport facility into an international airport capable of handling the annual tourist traffic to the resort province.

The project is now being bid out to private contractors willing to undertake the project and the technical working group of the Department of Transportation and Communications (DOTC) is presently evaluating the offers of proponents.

Sum Cheong was the construction arm of the CDC, a publicly-listed company at the Hong Kong Stock Exchange. CDC held a 58-percent interest in the company which it sold to Sum Cheong chairman Albert Hong for one Singapore dollar (S$1).

The management buyout is a scheme resorted to by the CDC to release itself from all the guarantees including all the guarantees provided to all the suppliers of the Sum Cheong Group.

The scheme also provided a legal shield to insulate the Hong Kong listed CDC from any contingent liabilities that may arise as the ultimate holding company of the Sum Cheong Group.

Sum Cheong has several other subsidiaries, namely: Sum Cheong Construction and Sum Cheong Piling Pte. Ltd.

The CDC’s decision to sell Sum Cheong came after the company incurred a pre tax loss of S$18 million for the 15 months which ended on Sept. 30, 2001. This amount included pre tax losses amounting to S$16,273,318, representing Sum Cheong’s outstanding balance to its major suppliers in Singapore, covered by a corporate guarantee by the CDC.

Sum Cheong had been counting on the management buyout as its ticket out if its S$16-million debt but without the CDC to support it, the company would be in dire straits unless it finds a new investor willing to infuse fresh capital to support its projects.

Sum Cheong’s participation in the Puerto Princesa project, however, was expected to be jeopardized by CDC’s decision to drop its subsidiary. – Des Ferriols