HELSINKI, Finland-Embattled handset maker Benefon Oyj has applied for statutory corporate reorganization after several attempts to find new investors failed. The company said it made the decision to apply for reorganization after negotiating with the company’s main creditors.
Benefon will also start an industrial cooperation procedure to implement necessary cost cutting during the reorganization program. The procedure excludes research and development functions, Benefon said.
Ernst & Young, Benefon’s auditor, released a statement noting that Benefon’s 2002 financial statements “have not been made according to the book keeping act and to other pertinent regulations and rules. It does not give correct and sufficient information about the financial situation of the group and the mother company for this reason. The financial statements of the group and the mother company cannot be confirmed.”
Ernst & Young cited Benefon’s continuing financial problems as the main reason for the questions surrounding the 2002 financial statements.
NRJ International announced plans in early March to acquire about two-thirds of Benefon through a new share issue directed at both investors and the company’s creditors. Benefon was on the brink of bankruptcy in late February before announcing the new share issue and planned commitments from NRJ.
NRJ then withdrew its previous commitments for $14.4 million in shares of the Finnish handset maker. Lebanese investor Philippe Frangie, who had previously committed to a $12.9 million subscription for Benefon shares, also did not come through with expected funding.
In February, Benefon said it needed a cash injection of about $40 million to survive.
