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Rakon sells stake to Taiwanese firm

NZN 19/12/2016 Paul McBeth

Rakon will raise $US10 million ($NZ14 million) from Siward Crystal Technology, selling shares at a 115 per cent premium, which it will use to repay debt while gaining a new partner with an established crystal manufacturer.

Auckland-based Rakon will sell 38 million shares, or 17 per cent of the company, at 37 cents apiece to Taiwan Stock Exchange-listed Siward in a placement that is expected to settle on February 15, it said.

As part of the deal, Siward will appoint a director to Rakon's board, which faced a shareholder revolt at this year's annual meeting that led to executive director Darren Robinson being dumped from the board.

The sale price is more than twice the 17.2 cents Rakon shares last traded at. The high-tech components maker's stock has slumped 44 per cent this year as it sank back into losses.

"Siward's manufacturing scale and expertise is a perfect complement to Rakon's leading-edge technology," managing director Brent Robinson said. "This partnership will give both companies a broader range of products and alternative channels into new and exciting markets."

Rakon and Siward also signed a technology deed to work more closely on development and manufacturing.

The Taiwanese company makes crystals and oscillators used in telecommunications and GPS devices, with operations in Taiwan, China, Japan, Singapore, the US and Europe.

Rakon tilted its focus to the telecommunications sector after rivals in the smart wireless market caught up, turning what was once a niche product into a commoditised one. The shift helped Rakon return to profitability in the March 2015 year, but a slump in spending by network operators weighed on the Kiwi firm in 2016 and pushed it back into the red, with the company reporting a first-half loss of $5.7m.

The company said it will use the $14.1m raised to repay debt, which was at $22.8m as at September 30.

Rakon also said it's still seeking another New Zealand-based director and expects to make an announcement early next year.

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