RAK Ceramics, one of the world's biggest ceramics manufacturers, on Thursday said it would sell its business in Sudan and use the cash raised to expand its sanitary ware production capacity in the UAE.
"The proposed sale is expected to be completed by 31 March 2015 and it is expected that RAK Ceramics will receive its entire proceeds in cash upon disposal of the shares. The company received an initial non-refundable cash deposit from the prospective buyers. Upon completion RAK Ceramics would have exited its business in Sudan in entirety and this investment would have realized cash for further expansion in high margin sanitary ware business in the UAE," said the company in a press release.
The company said it has entered an initial agreement to sell all its shares in RAK Ceramics Sudanese Investment Co, and aims to completed the sale by March 31, it said without naming the buyer or revealing the sale price. It added that it had received an initial, non-refundable cash deposit from the buyers.
RAK Ceramics has decided to sell RAK Sudan in order to avoid operational issues relating to imports of raw materials and spares. The transfer of the asset will also prevent further financial losses stemming from hyperinflation and FX losses, with total RAK Sudan losses from carried to consolidated financials being Dh16.48 million for the period ending September 2014, said the company's release.
"RAK Ceramics would like to confirm that it is in the process of selling its business operations in Sudan. We already announced our intentions in our Q3 results presentation and detailed at the time that we were reviewing the strategic options available to us in the country. The sale is the result of this review. At present, we are in a preliminary agreement status and the completion of the sale is subject to final agreement and regulatory approval. The increase in our sanitaryware production is inline with our strategy to focus on our core business; tiles, sanitaryware, taps and faucets and tableware," said Abdallah Massaad, CEO, RAK Ceramics.
RAK Ceramics will be following up their announcement of their sale of RAK Sudan with a net financial impact report following consolidation status and after receiving the necessary financial and regulatory approvals.