SYDNEY: Merchant House International Limited (ASX: MHI) has entered into a binding agreement for the sale of its 33.79% interest in Tianjin Tianxing Kesheng Leather Products Company Limited to Tianjin Wuxi International Trading Company Limited, a company associated with the controlling shareholder of Tianxing for approximately A$8,300,000 (RMB 40,000,000) before taxes and other fees.
There are no conditions precedent or other material terms and conditions to the sale. The Company is not aware of any information that would suggest the Company will not be able to remit the proceeds of the sale from China.
Forsan Limited, a subsidiary of MHI, holds a 33.79% interest in Tianxing and was party to a co-operation agreement in relation to production from Tianxing which expired in August 2023. The decision by the Board of MHI not to continue its investment in Tianxing followed a progressive decline in profits in recent years (as announced to the market on 13 July 2023).
As the investment in Tianxing has been previously fully impaired in the accounts of MHI, the financial impact will result in a profit on the disposal of an investment in an associate.
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