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

 

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Half Full: Fonterra Raises Forecast Milk Price

Fonterra Co-operative Group Limited today increased its 2016/17 forecast Farmgate Milk Price by 50 cents to $4.75 per kgMS. When combined with the forecast earnings per share range for the 2017 financial year of 50 to 60 cents, the total payout available to farmers in the current season is forecast to be $5.25 to $5.35 before retentions. More>>

ALSO:

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Reserve Bank: Labour Calls For Monetary Policy To Expand Goals

Labour's comments follow a speech today by RBNZ governor Graeme Wheeler in which Wheeler sought to answer critics who variously say he should stop lowering interest rates, lower them faster, or that inflation-targeting should no longer be the primary goal of the central bank's activities. More>>

ALSO:

BSA Extension And Sunday Morning Ads: Digital Convergence Bill Captures Online Content

Broadcasting Minister Amy Adams has today announced the Government’s plans to update the Broadcasting Act to better reflect today’s converged market... The Government considered four areas as part of its review into content regulation: classification requirements, advertising restrictions, election programming and contestable funding. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news