(Alliance News) - Shares fell in Bagir Group Ltd on Wednesday as it agreed with Shandong Ruyi Technology Group Ltd on a further extension of the completion date of its USD16.5 million investment.
In addition, Bagir said trading conditions have remained challenging, however it has seen a strong start to 2019 with a rise in sales.
Shares in the Israeli tailor dropped 30% at 1.02 pence on Wednesday in London.
Following discussions with the Chinese textile manufacturer Shandong Ruyi, Bagir has extended the unconditional completion date to the end of March 2020.
In November 2017, Bagir announced 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. This would give Shandong a 54% stake in Bagir.
Over the last 18 months, Bagir has received USD3.3 million in non-refundable payments from Shandong.
In February, Shandong said it will provide Bagir free-of-charge with manufacturing equipment to make suit jackets. The equipment is for exclusive and indefinite use in Bagir's Ethiopian manufacturing facilities.
Shandong has reconfirmed its commitment to deliver the equipment by the end of September.
In addition, Shandong has extended the credit payment terms for Bagir's acquisition of up 500,000 metres of wool and fabrics to March 31, 2020.
So far, Bagir has bought 300,000 metres with a value of USD2.9 million.
"Following face-to-face conversations, we have been convinced of Ruyi's intentions which together with the valuable operational support being provided a further and final extension was agreed," said Chief Executive Officer Eran Itzhak.
Concerning Bagir's current trading, sales for the five months to the end of May rose to USD27.0 million from USD21.8 million for the same period a year before.
Bagir has an order backlog of USD26.2 million and another three months during which the company can secure orders for completion in its current year.
Bagir's Ethiopian site is currently producing 3,000 trousers per day and is on track to raise output to 4,000 trousers per day by the end of 2019.
"The business is performing reasonably well in a tough market and while we have a good pipeline of new and backlog orders to focus the operating team on, there is no doubt this is a challenging period for major retailers and manufacturers," CEO Itzhak added.
