Pan-Electric Industries
Encyclopedia
Pan-Electric Industries was a Singapore
-based company that specialised in marine salvage
work, and had 71 subsidiary
companies, including hotel and property interests, with a market capitalization
of S$
230 million. The company collapsed in 1985 due to unsettled forward contract
s, forcing the stock exchange
s of both Singapore and Malaysia to shut down for three days. At its demise, the company had a total debt
of S$480 million, and all its share
s held by 5,500 shareholders were found to be worthless overnight. As of 2000, it remains the largest corporate collapse in Singapore's history, and the only instance where the Stock Exchange of Singapore
(SES) had to close. The Malaysian Kuala Lumpur Stock Exchange
was also forced to close for three days as a result.
In the aftermath of the collapse, key people in the company such as Peter Tham
, Tan Kok Liang, and Tan Koon Swan
were prosecuted and given varying jail sentences. The collapse of the company shook public confidence in the SES, causing prices of stocks to plunge. New securities laws were introduced in March 1986 to ensure that stockbroking firms can protect themselves against credit risks.
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
-based company that specialised in marine salvage
Marine salvage
Marine salvage is the process of rescuing a ship, its cargo, or other property from peril. Salvage encompasses rescue towing, refloating a sunken or grounded vessel, or patching or repairing a ship...
work, and had 71 subsidiary
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
companies, including hotel and property interests, with a market capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...
of S$
Singapore dollar
The Singapore dollar or Dollar is the official currency of Singapore. It is normally abbreviated with the dollar sign $, or alternatively S$ to distinguish it from other dollar-denominated currencies...
230 million. The company collapsed in 1985 due to unsettled forward contract
Forward contract
In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed today. This is in contrast to a spot contract, which is an agreement to buy or sell an asset today. It costs nothing to enter a...
s, forcing the stock exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
s of both Singapore and Malaysia to shut down for three days. At its demise, the company had a total debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
of S$480 million, and all its share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
s held by 5,500 shareholders were found to be worthless overnight. As of 2000, it remains the largest corporate collapse in Singapore's history, and the only instance where the Stock Exchange of Singapore
Stock Exchange of Singapore
The Stock Exchange of Singapore was a stock exchange company in Singapore. It was formed in 1973, when the termination of currency interchangeability between Malaysia and Singapore, caused the Stock Exchange of Malaysia and Singapore to separate into the SES and Kuala Lumpur Stock Exchange Bhd...
(SES) had to close. The Malaysian Kuala Lumpur Stock Exchange
Bursa Malaysia
Bursa Malaysia is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services.- History :Bursa...
was also forced to close for three days as a result.
In the aftermath of the collapse, key people in the company such as Peter Tham
Peter Tham
Tham Wing Fai was a Singaporean stockbroker and the director of Pan-Electric Industries. A failure by him to observe a forward contract agreement that he negotiated with Tan Koon Swan was responsible for the company's collapse in 1985....
, Tan Kok Liang, and Tan Koon Swan
Tan Koon Swan
Tan Koon Swan is a controversial Malaysian political and corporate figure, who was president of the Malaysian Chinese Association from November 1985 to September 1986.Tan first entered the political fray in the late 1970s...
were prosecuted and given varying jail sentences. The collapse of the company shook public confidence in the SES, causing prices of stocks to plunge. New securities laws were introduced in March 1986 to ensure that stockbroking firms can protect themselves against credit risks.