Fairwood halves losses after off-loading Mario restaurants
Fast-food chain Fairwood Holdings halved net losses to $60.35 million in the year to March 31, from $122.82 million a year ago, after off-loading its loss-making restaurant arm, Mario.
The group also proposed a $44 million rights issue to expand its fast-food chain in Hong Kong, which made an operating profit of $700,000 last year.
Fairwood has been in the red for the past four years, largely due to Mario and its mainland fast-food outlets.
The mainland outlets lost $40 million last year, while sales dropped 20 per cent despite the number of mainland outlets being cut by five to 17.
Managing director Dennis Lo Hoi-yeung said the ultimate cause of the operating loss rested with weak spending power across the border, adding the group hoped to minimise losses there this year by closing five more outlets in Guangzhou and Dongguan and seeking rent reductions.
'We have been shrinking the loss-making operations in China while expanding profitable Fairwood outlets in Hong Kong,' Mr Lo said.
The group planned to use $25 million of the proceeds of the rights issue to open six outlets in Hong Kong in the next six months on top of the current 90 outlets.
The rights sale involves issuing 341.59 million new shares at 13 cents each, with existing shareholders able to subscribe to them shares on a two-for-five basis. The sale price represents a 40.9 per cent discount to yesterday's closing price of 22 cents.