KUALA LUMPUR (Jan 23): Furniture maker Rhong Khen International Bhd (KL:RKI) is selling its Vietnamese indirect subsidiary RT Industries Company Ltd (RTI) to Singapore-based Maideli Pte Ltd for US$7.12 million (RM31.66 million) in cash.
The sale is expected to yield a gain of up to RM15.5 million for Rhong Khen. This move is part of the group’s strategy to streamline operations, reduce costs amid challenging market conditions, and strengthen its liquidity position.
Proceeds from the transaction will be allocated to general working capital and debt repayment, according to its filing with Bursa Malaysia on Thursday.
“The rationale of the disposal is due to abandonment of the initial plan to construct a sofa factory due to unfavourable market conditions since Covid-19 pandemic outbreak in 2020 and to reduce the cost associated in maintaining the dormant subsidiary company,” said Rhong Ken, formerly known as Latitude Tree Holdings Bhd.
Rhong Khen International, which specialises in the manufacture and sale of wooden furniture and components, is a wholly owned subsidiary of L-Tree Resources Sdn Bhd, which in turn is a wholly owned unit of Rhong Khen.
According to Rhong Khen’s audited financial statements for the financial year ended June 30, 2024, the company reported net assets of RM15.53 million, including RM4.7 million in cash balance.
The disposal is expected to be completed by the financial year ending June 30, 2025, Rhong Khen noted.
On Thursday, Rhong Khen’s share price rose by three sen or 2.44% to RM1.26, giving the company a market capitalisation of RM240.3 million.