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Envictus to sell loss-making Texas Chicken operations in Indonesia
ENVICTUS International Holdings is set to cease its loss-making Texas Chicken operations in Indonesia, with the sale of the master franchise agreement and its six stores for RM9.25 million (S$3 million).
In a bourse filing on Wednesday, Envictus said that its wholly-owned Indonesian subsidiary, Quick Service Restaurant, has entered a sale-and-purchase agreement to sell its Indonesian Texas Chicken operations to the firm Quick Serve Indonesia, a franchisee of Texas Chicken for Surabaya.
The assets have a net book value of RM10.7 million (S$3.5 million) as at end-June. This implies a loss on disposal of RM1.45 million for Envictus.
Four of the stores are in Jakarta, while the other two are in West Java. They range from between 196 sq m and 280 sq m in size. The Texas Chicken operations in Indonesia have accumulated losses of about IDR15.3 billion since kicking off in September 2018.
Envictus wants to instead focus on its Texas Chicken operations in Malaysia, which are starting to show earnings, the company said in the filing.
"The proposed disposal represents a good opportunity for the group to dispose of the assets of a loss-making business and obtain some consideration for it. If the sale assets are not sold to a third party, the group will have to write off the assets in its books when it ceases its Texas Chicken operations in Indonesia," it added.
The purchaser is not related to any of Envictus' directors or controlling shareholders, according to the filing. Ownership of the operations is expected to be transferred on March 31 next year. Envictus plans to use net proceeds from the disposal for general working capital.
Shares of Envictus, which is on the bourse's watch-list, closed at 13.1 Singapore cents on Wednesday, up 0.1 cent.