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

 

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news