Magdalen Ng, Asia News Network (The Straits Times), Singapore | Business | Tue, June 19 2012, 7:54 AM
The beleaguered home furnishings company Aussino Group hopes to revive its fortunes by moving away from its bedlinen retail business to start selling petrol in Myanmar.
It will buy a company with a foothold in Myanmar, which is projected to be one of the best growth prospects in the region.
Aussino's strategy was outlined by the firm in a filing with the Singapore Exchange yesterday.
It disclosed that it has signed a non-binding memorandum of understanding with the Max Myanmar Group Of Companies.
Aussino proposes to acquire the entire issued share capital of Max Strategic Investments, which intends to operate petrol kiosks in Myanmar after the acquisition.
Little is known about the firm.
An Accounting and Corporate Regulatory Authority search revealed that Max Strategic was set up only on June 15, and has a paid-up capital of S$2 (US$1.57). Its sole shareholder is David Wang, 27.
Under the memorandum, Aussino will buy Max Strategic's share capital for S$60 million. The funds will be raised by a share issue.
Once the acquisition has been completed, 85 percent of all of Aussino's business and undertakings will be sold to Anthony Lim, a director and controlling shareholder.
Aussino has operations in Australia, China, Malaysia and Singapore, where it has outlets in 12 locations including Plaza Singapura, The Clementi Mall and Jurong Point.
No details were provided as to how much Lim will pay for the stake. It is also unclear if the company will move out of the bedlinen business completely after the deal.
In the announcement, Aussino said: “The proposed acquisition presents an opportunity for the company to acquire a new operating business with growth potential in an emerging market.”
“In addition, [it has] the potential to significantly increase the market capitalization of the company, and potentially widen [its] investor base.”
This announcement was enough to send Aussino's shares soaring 22.4 percent to close at 10.4 cents on Monday.
The company was placed on the Singapore bourse's watch list last September, after recording three consecutive years of losses.
Firms that lose money for three years running, or if their average daily market capitalization falls below S$40 million over 120 market days, go on the watch list. They may then have their shares suspended from trading or be delisted, but may apply to be taken off the list if their financial health is restored within two years.
Aussino's plight has not improved. It suffered a net loss of S$1.04 million in the third quarter ending March 31 while revenue declined 12.8 percent to S$11.12 million from a year ago.
Its loss for the nine months was S$4.39 million.
Aussino attributed the poor performances to a S$3.2 million fall in sales from closed stores and counters in China.
