(Alliance News) - Tailoring firm Bagir Group Ltd on Friday said it has taken legal action against one of China's largest textiles manufacturers for breach of contract.
Shares in the company were 9.4% lower at 0.54 pence each in London on Friday morning.
Bagir said it is still awaiting a USD13.2 million cash injection from Shandong Ruyi Technology Group Co Ltd, as part of an agreement announced in 2017.
In November 2017, Bagir said it entered into a strategic partnership with Shandong, in which Shandong would invest USD16.5 million for 359.6 million Bagir shares at a price of 3.5 pence each.
So far, Bagir has received USD3.3 million from Shandong, which owns Swiss luxury fashion brand Bally.
Bagir in June said it agreed to extend the deadline for the remaining cash payment to March 31, 2020, as long as Shandong provided the company with "suit jacket manufacturing equipment", worth USD1.3 million.
"The manufacturing equipment has not, however, been delivered, to date. This further failure by Shandong Ruyi constitutes a material breach of the terms of the contract," Bagir said.
On its trading, Bagir said conditions "have remained challenging", but said sales in 2019 rose 8.8% to USD59.4 million.
For the year, it expects to report adjusted earnings before interest, tax, depreciation and amortisation, swinging from 2018's Ebitda loss of USD1.0 million.
"This improvement in adjusted Ebitda has been assisted by a further reduction of operational costs completed during the second half of 2019," Bagir added.
The company added that a trial order for a "large UK retail client" will be completed in March 2020. Bagir said it has already secured a USD850,000 suit order from the unnamed customer.
Chief Executive Micha Ronen said: "It is disappointing to announce our decision to have to take legal action against the Shandong Ruyi Group but we have been left with no alternative. This will, however, mean our operational focus can now be solely focused on Bagir and making innovative, modern, design-led tailored garments for the world's leading retailers."
By Eric Cunha; ericcunha@alliancenews.com
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