REDtone to sell entire stake in subsidiary

PETALING JAYA: REDtone International Bhd (RIB) proposes to sell its entire 92.31% stake in REDtone Asia Inc (REDtone Asia) to Million Vision Development International Ltd for RMB38.31 million (RM23.78 million).
In a filing with Bursa Malaysia last Friday, RIB said it entered into a share sale agreement (SSA) with Million Vision for the proposed disposal of its equity interest comprising 260.6 2 million shares in REDtone Asia.
“The proposed disposal will enable RIB to streamline and rationalise its operations including divestment of non-income generating subsidiaries.
The REDtone Asia Group (REDtone Asia group of companies) has been incurring losses since 2014,” it said.
The RMB38.31 million is to be satisfied via an assumption of debt by the purchaser of a sum of RMB21.31 million (RM13.23 million) being amount owing by the RIB Group to REDtone Asia and/or its subsidiaries and a cash consideration of RMB17 million (RM10.55 million).
The consideration takes into account the audited net assets of the REDtone Asia Group as at April 30, 2016 of RM16.85 million, the poor performance and the challenging business environment of the REDtone Asia Group.
About RM10.55 million of the disposal proceeds will be used for working capital of the group.
RIB’s original cost of investment in REDtone Asia is about RM75.43 million, incurred since 2010. As at July 31, 2016, the carrying value of REDtone Asia at the RIB Group is about RM16.82 million.
The proposed disposal is expected to result in a pre-tax gain of about RM6.07 million at RIB Group. It is expected to be completed within 21 days from the date of the SSA.