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

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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