Merchant House Narrows Loss, Sells Assets, Plans ASX Delisting
Merchant House International Limited reported a 38% reduction in net loss for FY2025, driven by asset sales and operational wind-down. The company is moving towards divesting remaining assets, delisting from ASX, and winding up.
- Net loss reduced by 37.9% to $4.59 million
- Sale of 33.79% stake in Tianjin Tianxing for approx. A$8.3 million
- American Merchant Inc. ceased operations; equipment sold for US$4 million
- Group remains solvent with $15 million cash reserves
- Plans for shareholder approval to distribute residual funds and voluntary ASX delisting
Financial Performance and Loss Reduction
Merchant House International Limited has reported a net loss of $4.591 million for the year ended 31 March 2025, marking a significant 37.9% improvement compared to the $7.392 million loss recorded the previous year. This reduction was primarily driven by the cessation of loss-making operations and strategic asset disposals.
Disposal of Key Investments
During the year, Forsan Limited, a subsidiary or associated entity, completed the sale of its 33.79% interest in Tianjin Tianxing Kesheng Leather Products Company Limited, a Chinese footwear manufacturer, for approximately A$8.3 million before taxes and fees. The transaction was settled in tranches, with the final payment released from escrow in January 2025. This sale marked a critical step in winding down the group’s international investments.
Cessation of American Merchant Inc. Operations
American Merchant Inc. (AMI), another key component of the group, ceased operations in September 2024 following sustained losses. Subsequently, AMI’s equipment was sold for US$4 million to two US-based companies, with payments structured through an initial cash payment and promissory notes, all of which have now been received. Discussions are ongoing regarding the sale of AMI’s land and buildings, signaling further asset divestment.
Solvency and Future Plans
Despite the operational wind-down, Merchant House remains financially solvent with cash and cash equivalents of $15 million as at 31 March 2025. The board has initiated preparations for the sale of remaining assets and intends to seek shareholder approval to distribute residual funds. This will be followed by a voluntary delisting from the ASX and the winding up of the group, marking the end of its corporate lifecycle.
Outlook and Market Implications
The company’s transition from an operating textile manufacturer to a winding-up entity reflects a strategic pivot driven by sustained losses and challenging market conditions. Investors will be watching closely for updates on the timing and terms of remaining asset sales, as well as the process for residual fund distribution and delisting.
Bottom Line?
Merchant House’s strategic exit and asset sales set the stage for shareholder returns and market exit.
Questions in the middle?
- What is the timeline for completing the sale of remaining AMI assets?
- How much residual value can shareholders realistically expect upon winding up?
- What are the risks or contingencies that could delay the voluntary delisting process?
