A tough year for long-suffering Rakon [NZX: RAK] shareholders just got worse.
The technology manufacturing company says it anticipates making a $53.8 million after-tax net loss, as it sells 80% of its Chinese joint-venture company and reduces its workforce in France.
The company says its anticipated 2014 loss includes a $37 million of investment and asset impairments related to its factory sale and other assets, while $17 million will come from trading results.
If the forecast holds the company stands to lose $86.6 million after tax over two years, following this year's $32.8 million loss.
At its annual meeting in Auckland this afternoon, chairman Bryan Mogridge says last year's result was "terrible" but the board is making extensive changes to lower its risk and debt, and to return the company to profit and, hopefully, to pay shareholders a dividend out of cashflows.
"It's not one we ever want to repeat," he said of the last financial year.
"It felt like with every step forward we were forced to take three steps back."
Mr Mogridge says the sale of most of its Chinese joint-venture company will lower its risk. He says market conditions were worse than the company's worst-case scenarios when it bought the Chinese company, particularly because of changes to the lower yen to US dollar currency rate and the price of its products.
Rakon chief executive Brent Robinson says the board is "very confident" it will become profitable next year.
He says its manufacturing base in Paris will be largely shifted to Bangalore, apart from its supporting research and development unit.
At today’s opening price of 23 cents, Rakon’s share price (NZX: RAK) has almost halved in the last 12 months.
This afternoon is important for the company on many fronts.
The Shareholders Association has said it will oppose the re-election of Mr Mogridge and director Brent Robinson – although it has little prospect of succeeding, since board members, including founder Warren Robinson, own about 30% of the company.
After the annual meeting, a special meeting will decide if the company should sell 80% of its Chengdu, China factory joint venture for $US18.8 million, and take a $32 million impairment.
Brent and Darren Robinson have to sell 493,000 recently-bought shares after the NZX found they had breached the Takeovers Code.
The Shareholders’ Association complained to the NZX in early July over a share price spike in the lead-up to Rakon’s announcement.
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