Amtek’s disposal of Crocodile brand inventories is reasonable, says independent adviser

TheEdge Mon, Apr 23, 2018 09:07pm - 5 years View Original


KUALA LUMPUR (April 23): Amtek Holdings Bhd's proposed disposal of its inventories of ‘Crocodile’ brand apparel and accessories is fair and reasonable as it is deemed to be in the best interest of the group, says the independent adviser for the deal.

The disposal is not detrimental to the interests of the shareholders, added Sierac Corporate Adviser Sdn Bhd in a circular to minority shareholders.

It urged the shareholders to vote in favour of the deal — which include the disposal of relevant retail equipment, fittings and fixtures — at the group's upcoming extraordinary general meeting.

The adviser said the rationale for the disposal is reasonable as Amtek has been incurring consecutive operating losses of RM2.7 million, RM2.1 million and RM2.8 million for the financial year ended 2015 to 2017 respectively on the back of challenging operating environment and cautious household spending.

"We have taken into consideration the increasing competitive and challenging environment for retailing of garments apparels and branded accessories, and consequently are of the view that the proposed disposal and early termination of the licence agreement may potentially reduce the group’s losses in future years," Sierac said.

Upon completion, the disposal is expected to reduce Amtek’s gearing to 0.51 times, from 0.62 times.

Amtek's wholly-owned subsidiary Apparel International Sdn Bhd (AISB), is the licence owner of the Crocodile brand.

Sierac said AISB expects to continue incurring losses in view  of shrinking disposal income resulted from higher cost of living and tighter consumer credit as evidenced by the deteriorating financial results for six months ended December 31, 2017.

Accordingly, Amtek has suffered a loss after tax of RM3 million for the period.

Amtek announced in January that it is disposing of its rights and assets to the Crocodile brand for RM5.6 million.

The group has said that it is taking steps to identify new businesses and assets that have prospects to be acquired, which will enable it to regularise its condition and maintain its listing status after the completion of the disposal.

However, Sierac said that in the absence of any regularisation proposal within 12 months from Jan 15, Bursa Malaysia will delist Amtek.

Amtek’s share price last closed at 28.5 sen, giving it a market capitalisation of RM14.25 million.

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