WORK at two Circle Line MRT stations could be headed for a slowdown as suppliers pulled credit terms from listed civil engineering contractor Swee Hong Ltd over delayed payments.
And in a move that would turn up the anxiety for its suppliers, Swee Hong on Wednesday filed an application in the High Court to propose a debt restructuring plan for three of its creditors - United Overseas Bank, the Building and Construction Authority of Singapore, and ACL Construction.
A local subcontractor told BT that several suppliers have "hit the brakes" and are demanding payment on overdue monies owed by Swee Hong for its projects at the Bukit Brown MRT Station and Thomson MRT Station.
"No one wants to give credit any more. There's no security. The suppliers are saying 'give me the balance before I go forward'," he said.
When contacted and asked if there were any problems at the two sites, Swee Hong's managing director Ong Hock Leong replied "no", without elaborating.
Swee Hong has been facing financial challenges for some time. In October last year, its independent auditors, Nexia TS Public Accounting Corporation, noted that that there is "material uncertainty which may cast significant doubt . . . on the group's and company's ability to continue".
It cited the group's incurred gross loss of S$6 million and net loss of S$20 million for the financial year ended June 2014, and the fact that its liabilities exceeded its assets by S$15.4 million. It also noted that the company had borrowings totalling S$7.4 million due within the next 12 months.
Under the terms of its debt revamp proposal filed on Wednesday, Swee Hong said it would pay its creditors using proceeds from the sale of its foreign workers' dormitory, North Coast Lodge. In addition, it would hold a series of "reverse dutch auctions", which give creditors the option of offering Swee Hong a discount on their claims.
"The number of demands made on the company has been increasing, and as such, the filing of the application is a timely one," said Swee Hong in a statement filed on the SGX.
It added that the present situation is a "cash flow issue" caused by late collections from completed projects and the delay in obtaining the Temporary Occupation Permit for the dormitory, among other things.
BT understands that other creditors include a local and an overseas bank.
Market watchers have cast a spotlight on cashflow problems faced by SMEs in the face of higher business costs. The SBF-DP SME Index, which was released in December last year, noted that SMEs are citing a lower growth momentum and more conservative outlook for the first half of 2015. SMEs in the construction and engineering sector were also less optimistic about turnover and profitability expectations.
Share trading in Swee Hong has been turned into a suspension from a halt following a late afternoon request by the company on Wednesday. The stock was last traded at 12.6 Singapore cents on Feb 5.