Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Rakon sells 80% of Chinese plant to trim debt, takes charge

Rakon sells 80% of Chinese factory to reduce debt, writes off $32 million on investment

By Tina Morrison

July 5 (BusinessDesk) – Rakon, the second-worst performing stock on the New Zealand sharemarket in the past year, will sell 80 percent of its Chinese joint venture factory to a Chinese electronics manufacturer for US$18.8 million to reduce debt.

Rakon, which will retain a 5 percent holding in the venture, is selling the stake to Shenzhen Stock Exchange listed ZheJiang East Crystal Electronic Co, a specialised electronic components manufacturer, the Auckland-based company said in a statement. It expects to take a $32 million impairment on the investment.

In May, Rakon said it planned to cut debt to $13.5 million in the current financial year ending March 31, from the $36.1 million outstanding when it made the announcement in May. The sale means debt can be reduced both earlier and below its target, the company said today.

Rakon and ZheJiang will share resources and capabilities, with ZheJiang funding expansion of the factory to enable the venture to achieve greater scale while Rakon provides research and development, technology and marketing to the partnership. Competition is strong and further consolidation in the industry is likely in the next three years, Rakon said.

Shares in the company, which makes crystal oscillators used in smart phones and navigation systems, had jumped today before the stock was halted for the announcement and edged up to 28 cents from 25 cents when they resumed trading, taking their gain so far today to 22 percent. The shares have tumbled 50 percent in the past 12 months.

The company posted a loss of $32.8 million last financial year as it cut up to 60 local jobs to shift manufacturing to China.

The sale is expected to settle on Sept. 30, pending a final agreement and any required regulatory approvals. A further update will be given at the interim results in mid-November, the company said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO:

Split Decision - Appeal Planned: EPA Allows Taranaki Bight Seabed Mine

The Decision-making Committee, appointed by the Board of the Environmental Protection Authority to decide a marine consent application by Trans-Tasman Resources Ltd, has granted consent, subject to conditions, for the company to mine iron sands off the South Taranaki Bight. More>>

ALSO: