KUALA LUMPUR (April 20): Vertice Bhd is planning to exit the fashion retail business by disposing of its 40% equity stake in Kumpulan Voir Sdn Bhd for RM9 million, cash, to cut its losses in the company that has been in the red since 2017 and now continues to face challenges presented by the Covid-19 pandemic.

Vertice previously wholly owned Kumpulan Noir, but sold 60% of the company to Seow Khim Soon for RM16.41 million in 2020.

In a bourse filing on Wednesday (April 20), Vertice said it had inked a share sale agreement with Distinct Seasons Sdn Bhd to sell the remaining 40% stake.

Vertice said the RM9 million disposal consideration represents a 41.35% discount to Vertice’s 40% share or RM15.34 million of Kumpulan Voir’s unaudited consolidated net assets as at Dec 31, 2021.

The disposal 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 at Dec 31, 2021. Vertice invested a total of RM35.6 million in Kumpulan Voir between 2007 and 2021.

Vertice intends to funnel RM8.9 million from the disposal proceeds to fund its working capital within the next 12 months, while the remainder will be used to defray estimated expenses for the proposed disposal.

Vertice said the disposal is a strategic move for the group, as it will be able to fully divest its exposure to Kumpulan Voir, and limit its financing obligations to support the business operations of Kumpulan Voir. The group expects to complete the proposed disposal in the second quarter of 2022.

Vertice’s shares closed unchanged at 23 sen apiece on Wednesday, valuing the group at RM73.4 million.