11 Oct REDtone International sells off all its stake in China unit
REDtone International Bhd (RIB), which classified its China operations as “discontinued operations”, has sold off its entire 92.31% equity interest in REDtone Asia Inc, under which its investments in the republic are parked.
The telecommunications service provider told Bursa Malaysia that it had signed an agreement to sell REDtone Asia, a company quoted on the Over-The-Counter Bulletin Board in the US, to Million Vision Development International Ltd for 38.31 million yuan (RM23.83mil).
The purchase consideration will be satisfied by Million Vision assuming debt of 21.31 million yuan owing by the RIB group to REDtone Asia and/or its subsidiaries, and paying the remaining 17 million yuan in cash to RIB.
“The consideration of 38.31 million yuan was arrived at on a ‘willing-buyer willing-seller’ basis after taking into consideration, among others, the audited net assets of the REDtone Asia group of companies as at April 30 of RM16.85mil, the poor performance and the challenging business environment of the REDtone Asia group,” RIB said.
RIB’s original cost of investment in REDtone Asia was about RM75.43mil, incurred since 2010.
RIB, which is a subsidiary of Berjaya Corp Bhd, said REDtone Asia is an investment holding company whose core business is carried out by one of its subsidiary companies, Shanghai Huitong Telecommunication Co Ltd, which provides Internet protocol call and discounted call services.
“The proposed disposal will enable RIB to streamline and rationalise its operations, including divestment of non-income generating subsidiaries.
The REDtone Asia group has been incurring losses since 2014,” it said.
In its latest annual report, REDtone said its China operations did not fare well for the 11-month financial period ended April 30, 2016.
“Voice business declined significantly also due to widespread use of OTT (Over-the-Top) applications on mobile devices while the motor inspection business did not take off.
“The China operations are now classified as discontinued operations,” it said.
Source: The Star