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The Xiamen-headquartered company is possible to be separated and dispose its debts as the first step, and get regrouped and lure fresh capital as the second step, said a source.
There are two options for the insolvent company to revitalize its business - either file for a bankruptcy, liquidate its debt, and stop operation, or seek another company for a business integration, pointed out market observers previously.
As the effective shareholders of Amoi, China Electronics Corporation (CEC) and the municipal government of Xiamen are about to keep the company from entering into a bankruptcy, because Amoi is still a leader in R&D. Amoi's high liability ratio and heavy debts, on the other hand, makes it difficult for the two shareholders to finalize an aid plan, explained the source.
Notably, in June, Amoi entered into a strategic cooperation agreement with a telecom product company in Shenzhen, under which the electronics maker will outsource mobile phone production and distribution to its partner.
In detail, Amoi will be responsible for the R&D of 2G, 2.5G and 3G mobile phones, while its cooperator will take charge of production and sales, said another source.
The company saw its mobile phone sales volume increase by 25% or so month on month in the first half of 2009, bringing hopes to its shareholders.
Amoi scored CNY 1.68 billion sales revenue in 2008, dropping 51.2% from the previous year, said the company earlier in a statement, ascribing the dim performance to the insufficient capital supply as well as the slow product rollout.
"The cooperation is one of the most effective ways to secure a continuous product supply and, strengthen the Amoi brand awareness in the market, " said Xi Dawei (transliterated), general manager for the Shenzhen company, in response to the aforesaid partnership, "Only by this means will Amoi get opportunities to bring its brand into revival in the future."
The company has built up an operating center for Amoi in Shenzhen, according to Mr. Xi, adding that one of the major tasks now is to rebuild the Amoi brand image so as to restore the mobile phone distributors' confidence.
(USD 1 = CNY 8.63)
Source: www.enet.com.cn (July 13, 2009)
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