KUALA LUMPUR (April 20): Vertice Bhd plans to exit the fashion retail business by divesting its 40% stake in Kumpulan See Sdn Bhd for RM9 million, in cash, to cut its losses in the company that has been in the red since 2017 and continues to face the challenges posed by the Covid-19 pandemic.
Vertice previously owned 100% Kumpulan Noir, but sold 60% of the company to Seow Khim Soon for RM16.41 million in 2020.
In a Wednesday April 20 filing, Vertice said it had signed a share sale agreement with Distinct Seasons Sdn Bhd to sell the remaining 40% stake.
Vertice said the disposal consideration of RM9 million represents a discount of 41.35% from Vertice’s 40% share or RM15.34 million of Kumpulan’s unaudited consolidated net assets See as of December 31, 2021.
The divestment is expected to result in a loss of RM8.4 million, compared to the net book value of Vertice’s investment in Kumpulan Voir of RM17.4 million as of December 31, 2021. Vertice has invested a total of 35, 6 million RM in Kumpulan See between 2007 and 2021.
Vertice intends to channel RM8.9 million of the divestiture proceeds to fund its working capital over the next 12 months, while the remainder will be used to cover estimated expenses for the proposed divestiture.
Vertice said the divestiture is a strategic move for the group as it will be able to fully divest its exposure to Kumpulan Voir and limit its funding obligations to support Kumpulan Voir’s business operations. The group plans to finalize the disposal project in the second quarter of 2022.
Vertice shares closed unchanged at 23 sen apiece on Wednesday, valuing the group at RM73.4 million.