A COUPLE of white knights have come in to bail out Sesdaq-listed ceramic tiles supplier and producer, NH Ceramics, which has been struggling to remain afloat for the past couple of years following heavy losses.

　　The company announced yesterday that it has reached an agreement for investors Chan Ewe Teik and Ko Beng Soo to subscribe to 75 million new shares at 4 cents each for a 53.58 per cent stake in the company.

　　The two men have also agreed to grant the company a convertible loan of $3 million.

　　The investment is subject to certain conditions, including due diligence, a whitewash waiver from the Securities Industry Council from having to make a general offer for the rest of the company, and the company remaining listed.

　　The share placement is being done at a 20 per cent discount to the volume-weighted average price per share of 5 cents for trades on Dec 7, before the stock was suspended.

　　The current controlling shareholders, Paul Goh Moh Chye and his wife, have agreed to vote in favour of the proposals and also not to sell their respective stakes in the company for six months.

　　They have also agreed to charge their shares to each of the placees to ensure the repayment of the loan which will be used for working capital and for acquisitions.

　　Mr Chan is a Malaysian residing in Singapore who is a director of investment company Sante Fe, which is engaged in corporate restructuring, strategic planning and equity financing, while Mr Ko is a Singaporean and the managing director of Zephyr Company Pte Ltd which is involved in the manufacturing and printing of labels.

　　NH Ceramics auditors, Ernst & Young (E&Y) , had raised questions about the viability of the company as early as last October. The group incurred a net loss of $4.99 million for the financial year ended June 2005 and, as at that date, the company's and the group's current liabilities exceeded current assets by $31,734 and $2.04 million respectively. In October this year, E&Y issued another warning after NH Ceramics, which supplies and services ceramic and marble tiles for the construction industry, reported a net loss of $2.7 million for the full-year ended June 30. The group's current liabilities also far exceeded its current assets by $4.09 million.

　　The auditors said that NH Ceramics' ability to remain as a going concern depends on two factors: Its profitability and cash flow in the 12 months, and the support it gets from banks and potential investors.

《The Business Times》